Cameco Corporation (CCO.TO)

Uranium Industry. A year or so after Fukushima he jumped on this, thinking Uranium would be part of the cleaner uranium needs the world has, but after a year or so he got out of uranium. He has not seen anything yet that a bottom is in. It could still weaken still.

He is watching this and spending a little bit of time looking at it because it is so beat up. Reported a pretty miserable Q2, and the stock fell further. It still trades at a relatively high valuation multiple of about 17X next year’s earnings. There are still a number of concerns about the oversupply of uranium, and part of that needs to be resolved by getting a number of these Japanese nuclear reactors back online. There is also a CRA issue that is overhanging the stock, and it is probably priced in. If there was a negative decision from the trial, it could have a further negative impact on the share price.

(Market Call Minute) They have just gone through the toughest quarter in the toughest market in the last decade. The average weighted production cost is around $31, where Uranium is right now. Start to build a position.

It usually moves lower until the end of September each year. It has a distinct downward trend. It is underperforming the market and short term momentum indicators are negative. Wait for signs of the commodity bottoming. There are currently no signs of support on the charts. It looks like it is a falling knife.

This has had some really rotten earnings reports, as well as some technical problems with their mines. The price of uranium keeps on going down. We hear of more and more reactors being cancelled or slowed down. There are a lot of reasons to be concerned about this stock. Seasonally it is currently in a period of seasonal weakness from now through to October of each year. Technically the stock is in a distinct downward trend and is underperforming the market. There are no signs of support yet.

(Market Call Minute.) This is one that he would buy below $10.

If you want to own the sector, you might as well go for safety and security of the largest company. This is a sector he doesn’t pay a whole lot of attention to right now. You might have to wait 5 years for the cycle to turn.

A 1^st rate mining company, but it is uranium, and sells its contract in a sort of staggered form. It doesn’t get exposure to the spot market. Doesn’t think there is a tremendous upside to the uranium market. A relatively small part of the budget of nuclear power plants. Although there are a lot of nuclear power plants under development in China, it is still not enough to really move the needle. At the best, this is a Hold, and possibly a Sell.

(Market Call Minute.) He has been looking at this. Uranium prices moves like it is in quicksand. Attracted by the valuation, but maybe not just yet.

This has been hurt because uranium prices have gone up. Fundamentally it is attractive, but uranium prices just don’t seem to move. They also have a tax overhang.

This looks like it wants to go lower. A very choppy stock. The long-term trend is down. It has a target of around $8.

Tends to like stocks when they are rallying and had gotten interested in this when it was about $18. A cheap stock given what it is, but it is never really that cheap. Uranium pricing has been very, very weak. Everybody seems to think it is a very tight dynamic supply/demand and can’t understand why prices are so low. That is the problem with commodity stocks. He tends to lean towards stocks that he can understand fundamentally. Because of that, he has always stayed away from this.

She doesn’t own any uranium stocks. After the disaster, there was a moratorium on a lot of nuclear plants. It has been very slow to come back on stream. Eventually, for countries like China, nuclear is going to be a source of power for their energy demands. There is no near term catalyst for uranium. If you have a very long-term horizon, you could keep holding it.

Uranium has been a very tough place to be, and this has been a chronically underperformer, going back to 2007 when it peaked out. When there are lots of companies doing well, and lots of sectors that people care about, trying to pick a bottom in something that has been falling for 10 years is a tough thing to do.

Chart shows the financial crisis peak was in 2007 followed by a rally in 2011, which was well below the peak. When that happens, you know that the stock is not going to go anywhere for a long time, which has happened in this case. Unless the price of uranium can get above $40 a pound, it is going to be dead money for a while. Thinks the downside is limited, but also the upside is limited. This is a trade that will do no harm.