Cameco Corporation (CCO.TO)

What would be a trigger to make you purchase this? This is a commodity that has been in decline for a decade. It really got hurt when we had the Fukushima tsunamis. Japan shut down a lot of the nuclear reactors. He would want to see Japan restart their reactors. There is a big supply of uranium available, and you have to question where the demand is going to come from.

This has really been spanked in the last 4-5 months, taking it down from $13-$14 to around $10, and it is now coming back. When watching some of the commodities, the recovery in some of them fits into the whole infrastructure buildout and fiscal policies. There is always demand for uranium, because all global reactors need to be refilled, and this company is the low cost one. At this price, you won’t hurt yourself, you just have to wait for materials to come back in again.

His model price is at $15.71, a 21% upside. It looks like it is going to go to $14.63. Pays a 3.43% dividend.

It has been in a distinct downward trend for years. Last year it did not do anything. This year we have mild encouragement. It is trying to bottom. Short term momentum indicators are positive. It moved above the 50 and 20 day moving averages.

For a 5+ year hold? On a 5-year basis, even on a 1-year basis, he would say this is definitely a Buy. It has undergone a fair bit of pressure in the last year, which has to do with the Spot uranium price, which has been very, very weak. Also, they are going through a tax battle with revenue Canada.

This has had a rally in the last few weeks, and like all commodity stocks it participated in the post Trump euphoria. The price of uranium has been a significant disappointment. We really haven’t seen a cleaning out of excess supply. He would like to see significant announcements with respect to sustaining the life of these nuclear reactors in the US, and a reaffirment of the Japanese strategy to restart reactors.

The price of uranium has basically gone nowhere but down over the years. It is very hard to see what would be the catalyst for this name. He would be looking to lightening up. The underlying driver is uranium prices, and you are not going to get a bump.

She understands that the dispute with the CRA is still ongoing. The stock is quite depressed which is really a function of uranium prices. Uranium demand has been quite weak. There is no real near term catalyst. She would not be interested in buying this right now.

This is not a double bottom. There was no distinctive bottom between two rallies. The two bottoms should be more equal. Materials are doing better with Trump and this one has broken its downtrend.

He is not sure it has bottomed. He is going to look into it soon. It will be impacted slightly by a Trump presidency. Uranium is a clean burning fuel. Trump is against it. It could be dead money for years.

(Switching from Uranium Participation (U-T) to this?) Cameco is really a proxy for uranium which has been falling over the last couple of years. He would do the switch as this will allow you to earn some dividend income while you are waiting for the uranium market to turn. Maybe do a quarter now and the rest later.

We had a little bottom right around the 14^th of October. When we look at the long term chart it has been steadily down for a long time. He would prefer to wait for it to cross $15.

Will the lawsuit by the tax authorities create an opportunity for a long-term hold? For the last year or 2, the uranium spot price has been coming down. When you factor in the CRA dispute ($2 billion) it is hard for them to gain momentum. The spot price is currently threatening to drop below $10. Uranium spot prices are at their lowest level since 2005, and there is an oversupply in the market. Prices could go lower and he doesn’t see any catalyst for the company. If the CRA dispute goes away, that might be a catalyst, but it probably won’t finish until spring, so you probably have a good year in which to find a good entry point.

For a 5+ year hold? 5 years is tough, because there are 2 issues. 1) When is new demand for reactors going to pick up, and 2) it has an argument with the CRA, which has yet to be resolved. If he were going to own uranium, it would be through Uranium Participation Corp (U-T).

The science and rationality behind nuclear energy is undisputed, but whether or not we are able to harness that energy in a safe manner is the question. He wouldn’t be a buyer.