A week ago Cameco released its first quarter results which unfortunately did not sit too well with investors as the stock was sold off. We have listed the highlights of the news release and ask the question has the sell off been overdone.

As we can see from the above chart the RSI has dropped below ‘30′ to 16 which suggests that Cameco is now oversold, also note the STO looks to have bottomed and has turned up slightly and the MACD is in oversold territory.

Earnings highlights are as follows:

Cameco Corporation (TSX: CCO; NYSE: CCJ) today reported net earnings of $142 million ($0.36 per share diluted) for the first quarter of 2010, compared to $82 million ($0.22 per share diluted) in the first quarter of 2009.

Our net earnings were significantly higher for this quarter, primarily as a result of recording an after-tax gain of $31 million for unrealized mark-to-market gains on financial instruments, compared to a loss of $24 million in the first quarter of 2009.

Adjusted net earnings for the first quarter of 2010 were $111 million ($0.28 per share adjusted and diluted) (see Non-GAAP measures), 8% higher than in the first quarter of 2009. The 8% increase was attributable to:

higher profits from our fuel services business due to higher sales volumes and higher production

higher profits from our electricity business, relating to higher realized selling prices

lower profits in our uranium business due to lower sales volumes and slightly lower Canadian dollar realized prices, which were impacted by a stronger Canadian dollar ($US realized prices increased 15%)

“We are continuing to advance our outstanding portfolio of uranium assets through sound financial management and through continued commitment to operational excellence” said president and CEO Jerry Grandey.

“The long-term fundamentals of the nuclear industry are positive. Cameco is prudently investing today in production growth and new technology to pursue our vision to be a dominant nuclear energy company. Our nuclear focus, financial strength and management capability support our growth plans as we build for the future,” said Grandey.

The Montreal Gazette led with ‘Cameco posts impressive Q1 earnings’ even so the the investment community proceeded to sell the stock. We will take a closer look but for now it looks like a ‘buy’ to us.

Cameco Corporation trades on the New York Stock Exchange under the symbol of CCJ and on the Toronto Stock Exchange under the symbol of CCO and is currently trading at US$23.48.

Cameco has a market capitalization of $9.23 billion, with 392.97 million shares outstanding, a 52 week trading range of $23.01 to $23.85 with an average volume of 2-3 million shares traded and a P/E of 12.45.

Have a truly sparkling day and be prepared for a rocky week as the EU continues to dither and Britain has refused to put money into the current deal, another case of watch this space.

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