Cameco Corporation (CCO.TO)

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.

He likes the uranium space long term. It is one of the easiest ways to generate energy. Carbon laws are coming in to change things. He thinks there is a trade here. It won’t get too much above the 52 week highs, however.

(Market Call Minute.) Still doesn’t like this company. You don’t need to own it. Wait for uranium to go up some year or decade, and then look at it.

He would have been much more bullish on this company when energy prices were higher, as uranium would have been seen a much more viable alternative. It is going to be a while before you see a rebound in alternative sources of energy.

The “go to” name in uranium. Has a nice contract structure where it is fairly layered in with contracts rolling off it at various points of time, and others taking their place. Because of this it is kind of a defensive play within uranium. New reactors are what will drive uranium higher. The Germans are moving the opposite way and shutting them in. Overall, China remains the big grower of nuclear reactors globally, but there is not a huge groundswell of it happening. Sees uranium prices being range bound for some time.

It is forming a nice base pattern. It should move higher from December to May, seasonally. It is not showing strong momentum at this stage in the markets. Uranium contracts are signed early in the new year.

There appears to be some recovery going on in that sector. CCO-T is going nowhere right now. He would want to see a lot more potential price increase in uranium. It is too early.

Generally he is neutral on Uranium. There is talk of Japan restarting several reactors after the previous disaster. There is talk of India, Russia and China planning new nuclear power plants, but that has gone on for some time. He prefers U-T because you don’t have to worry about production rates and so on. Hold off on this. If you saw a reopening in Japan and then orders for new plants globally, you could step in.