Cameco Corporation (CCO.TO)

This has great value, but you have to wait for the underlying commodity to move up. This company is a low cost producer. The question is, how long do you have to wait before you start to get a return.

Doesn’t think there is any near term, or even medium term catalyst to get the stock moving. Uranium prices are at historical low levels. It is very oversupplied. They missed numbers in their latest quarter. The restart-ups in Japan have been very slow to happen. Also, there are some closures in the US. There was a cancellation on one of their long-term contracts. They have a tax trial coming up in October. Doesn’t see the stock doing much over the next 6-12 months.

(Market Call Minute) Uranium keeps collapsing. Long term it is a good company. They seemed to have solved all their problems.

The world’s largest producer of uranium. The spot price on uranium has been pretty brutal as of late. It goes back to Fukushima several years ago. The Japanese really haven’t started up their nuclear reactors yet. Long-term, this is a screaming Buy. Short-term, this is probably range bound. The next year could be choppy because the spot price is under pressure. Feels that if you bought it today, you would make money on it in 5 years.

The 3-year chart shows this is continuing on a downtrend. You don’t try to catch a falling knife. He would avoid this. If you own it, he would be looking for an exit.

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.