Cameco Corporation (CCO.TO)

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.

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.