Cameco Corporation (CCO.TO)

The increase in the consumption of uranium for power stations is visible and is big. It is slow growing, and it still hasn’t moved the price of the metal. The metal is now stuck with the general decline in hard commodities. This is the premier stock globally, and should be safe. One day in the future it should reflect a higher uranium price.

They have a potential tax liability with revenue Canada, which could be as high as $800 million, so that is a bit of an overhang. Up until the Japan nuclear disaster, it looked like uranium prices were going to go up. He is just not a full believer.

(Market Call Minute) You want to own this when Uranium gets squeezed higher. It is one of the few resources he has.

This has long term support at around $17-$18. The only danger right now is that the highs are getting lower. You have to wait for a break out. As an investor, he would wait for it to break out above $19 before he bought it.

This has been the bane of his existence. It has not worked the way he had hoped it would. Since January it has been slipping slowly, but surely, into lower levels. Technically, it is still in a downward trend. Seasonally, this is the time for this company to normally do well.

He owns shares and intends to acquire more. He is particularly attracted to uranium. Globally it costs about $65 a pound, including the cost of capital, to make uranium. They sell it for $35 a pound, meaning they are losing $30 a pound and are trying to make it up on volume. Canada is the world’s best and lowest cost producer. The price has to double, or else the supply goes away.

This is going to take some time. The stock is reasonably safe. Cigar lake is working well. You might get more spice out of some of the smaller producers such as Denison (DEN-T) or Fission Uranium (FCU-T).

The long-term uranium story is good. Recently there has been a consolidation in the stock price. Technically the stock is in a channel, and currently we are in the top end of it. Being at the top of the channel doesn’t mean that this is going to go back down to the $15 level. We are getting close to the seasonal standpoint where this stock does do well. It tends to pick up a little bit in November. He is looking for it to move above $20 and move higher.

Thinks this is okay. In the past has always played uranium through Uranium Participation (U-T). There is still major demand for nuclear powered plants in India and China. As those things go on it will eventually take up the slack.

We are seeing a trend that he hopes will continue i.e. analysts’ forecasts, which are now starting to swing back upwards. The stock is quite reasonable at 1.25X Book. PE at 14 is nothing to write home about, but nonetheless the stock historically is cheap. You would think that in an eco world, we have to have nuclear coming back. There is a constant demand out of China. Nuclear still makes a lot of sense.

Have now brought their new mine into production. The stock is trading at a 13X PE, and is forecast to grow at 44% in 2016 and give you an ROA of 10%. The real key is will there be a start up in additional nuclear plants, particularly in Japan

He is getting keen on uranium, but is going to be picking up a little through flow-through. Flow-through is a tax structure. This one has been pretty flat and he doesn’t think it is going to go down any more, so it is a pretty safe entry point right now. Not something he would be adding to right now, but if you are looking to participate in uranium, this is definitely the place to be.

There has always been this allure that uranium demand is in excess of mine supply, and that over time inventories are going to get used up. The problem with uranium is Japan shutting down all their nuclear facilities as well as Germany deciding to shut down their plants. Recently signed a big agreement with India. China and India are still building a lot of nuclear facilities, and over time this probably will do fine. Pays a reasonable dividend, but doesn’t grow it. Thinks the next 10 years will be much more favourable, but he wouldn’t have a whole lot of confidence in growth going forward.

Anything that was hated recently had a strong move today. This one has been on its support level, consolidating and going back up again. That is a positive sign. A lot has to do with what is happening in supply and demand in this particular market, uranium in this case. We are coming into the period where material stocks can do well, particularly in November. The fact that we are bouncing off that same spot that was there before is positive.

Spot uranium has been moving higher. If you pick up some of this here, you will get a slow rate of return. It looks like Japan is going to get back on line now with their reactors. China has talked about doing that as well. You are not going to get any kind of explosive growth, but if you are wanting to buy some uranium, this is the one to buy. He thinks you will see it start to slowly move higher.