Cameco Corporation (CCO.TO)

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.

He doesn’t really look at uranium stocks. You hear the Chinese are building lots of reactors, but Japan and Germany are closing down nuclear facilities. There is not a lot of growth for nuclear in the rest of the world. This is an energy stock and it trades like an energy stock. He would rather own oil companies.

Has always been wary of uranium. It is not just a supply/demand problem, but is also a political animal. The US has continued to build large inventories of uranium, so there doesn’t seem to be any immediate reason for the price to go up. They just got approval to double the capacity of their McLean Lake production facility. On the other hand, their last quarter had some definite disappointments.

Thinks it is building a base and it has plenty of room to go higher. It’s been very, very range bound for quite some time. Needs to get above $17-$18 to change the channel that it is in right now. If he had this, he would continue to hold.

This is strictly a supply/demand scenario. Right now there is so much momentum in other things that he would be shoring up those monies in the areas where he sees momentum coming, and that would be on precious metals.

Hold or Sell? It is going to take a couple of years for uranium to resolve itself. Expects at today’s price, you will be happy 5 years from now. What he does in situations like this where there is underlying value, if the stock is volatile enough, selling near dated Puts and Calls and capturing the premiums. That forces you over time to do something logical, Buy low and Sell high, and it causes you to get paid doing something logical in the interim. You need to talk this over with your financial advisor.

(Market Call Minute.) Has said for 10 years that if it ever got to $15 he would look very seriously of buying it. It is close to the point where it is getting interesting.

The company is saying that the current tax issue is going to go away and is not going to be a problem, and if it doesn’t go away they are well reserved for it. He just doesn’t see a lot of growth in this. They’ve had lots of problems with their mines in the past, and have never really recovered from it. Believes that there is a long-term future for uranium, but just doesn’t know if it is a great business to be involved in.

Uranium. Long-term he thinks this is a great, great company. In the short term, this is a difficult sector. Uranium is hitting 10 year lows on the spot market. If you want to invest in uranium, this is a wonderful way. In the short term, he doesn’t see the stock going up. Uranium prices are hitting new lows.

He would normally stick to his model price. Right now there is nothing in the market. At $14.82 he would maybe buy it. If it broke through $21.50 he would agree it is going up. There is a 26% upside to his model price, but the market needs to believe it, which it does not right here, right now.

The uranium story might never come back. With natural gas at $2, nuclear power doesn’t make any economic sense. Also, with solar power getting cheaper and a huge amount of installed wind power based already, he is not sure nuclear power ever will be economic again.