Cameco Corporation (CCO.TO)

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.

There are a lot of reactor projects, but they are massive and take a long time to get up and running. Uranium pricing has been moving better a little bit. Has never been a cheap stock and has never been that exciting to own. He needs to see some sustainable momentum or operational improvement before getting excited. Not that cheap. Why not look at a lumber name? You get that same kind of exposure and half as expensive with a growing revenue EBITDA.

Chart shows it is building a base and has a bit of a modified head and shoulders pattern. A bottoming pattern. It looks like the trend is about to turn to the upside. Material stocks generally tend to do well between November and May, but this being uranium can do well with energy stocks through the summer. This is one that you might want to nibble at here.

Has chosen this as his single stock to outperform the market during 2015. Had looked like uranium prices had finally bottomed at around the $28 per pound level. It had actually got as high as $40. Technicals have been fairly positive in the last little while, but the price of uranium has gone from $40-$35, which is not supposed to happen. This has caused the stock to slow down, but it is still in an upward trend. He wouldn’t be overly concerned, but seasonality does not support this particular trade.

It is trading at 12 times earnings with a decent dividend. Certainly Uranium is going to go up soon. Japan is going to start their nuclear power program soon. He would look to buy it a little cheaper.

He holds a small position. Thinks uranium has likely bottomed. Japan is slowly likely to come back online. Sentiment around the sector is improving. Thinks this is fine here. If he is right, and the sentiment improves in the sector, this could be a decent investment in the next 6-12 months.

It is having trouble at EBV+2, which is basically his level at $20.96. He has a model price of $30.60, a 48% upside. The real issue here is that the market has to agree with those earnings estimates, and the market is certainly not agreeing. He would feel better on a positive transit on is EBV+2. He would put a target of EBV+3, which is $28-$29, and get out of the stock. If it came back to $17.60, he would be a buyer.

This is one where you can wait and be patient. It is not going to move on you very much. He has decided to wait and watch it. If you are slightly late, that is probably okay.

He likes the industry. They are in a great position to supply India now as a quarantine has been lifted. If the commodity repaired itself, then all of these stocks would come back. This stock will lift up if money flows back into it.

The price of uranium, whether it spot or contract, was really in the tank. Then the courts allowed nuclear reactors in Japan to start up again. There are 20 more that have applications in. Doesn’t feel power plants are going to make much difference to the price of uranium. If you are going to be in the uranium space, it should be Uranium Participation (U-T), not this one.

(Market Call Minute.) Doesn’t see any near-term catalysts to get uranium prices going.