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« Aurora Energy Resources Inc: Up 27% in 2 months | Main | Ur-Energy: BUY »
Tuesday
Apr242007

Uranium Participation Corp: Add to Holdings

Uranium Participation Corp has been on our Uranium Stocks BUY list since November when it was trading at under $12 and Uranium Participation did very well, rising to C$18.76 in a small number of months.

Uranium Participation Corp Chart Analysis April 2007

However it has now experienced a pullback to $15-$16...is now a time to add to your holding or if you haven't yet bought Uranium Participation, is now the time to buy?

Throughout its history of trading, Uranium Participation has usually tracked the uranium price and for the majority of that time it was being traded at a premium. So its market capitalization was larger than the net asset value of the uranium it was holding.

In case you are not too familiar with Uranium Participation, this is not your regular uranium mining or exploration company. Instead of mining or exploring for uranium, Uranium Participation simply purchases uranium, in the form of Uranium oxide in concentrates (“U3O8”) and Uranium hexafluoride (“UF6”). Therefore this gives investors the exposure to rising uranium prices without the risks of mining or exploration.

The stock is currently trading under C$16 with a market cap of $890,815,233. The NAV of the company is $886,279,870 using the current Uranium price of $113/lb. So the company is pretty much trading at the same value of its assets, the uranium holdings.

Considering Uranium Participation usually trades at a premium so now could be a good buying opportunity, especially if you believe as we do that the price of uranium is going much higher or if you believe that the premium that this stock usually trades at will be reinstalled.

Technically speaking, Uranium Participation has fallen but found support at its 50dma and recovered slightly, perhaps suggesting that this correction is over and Uranium Participation is set to move higher. The STO is lower than it has been in over 6 months and the RSI is also at the bottom of its trading range.

In conclusion, if you have not bought into this stock then now could be a good time to make a purchase, if you do own the stock and wish to add to your holdings, then this pullback could present a good opportunity.

Uranium Participation trades on the TSX as U


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Reader Comments (6)

NAV on 3/31 was $12.38 CDN and the stock price was just over $17 CDN. Seems like quite a premium to me. I am a stockholder and plan to be for the long run.

April 25, 2007 | Unregistered CommenterGene

Yes you are quite right, but when Uranium Participation did that report, they used a uranium price of $95/lb which was the current price at the time.
Now the price is $113/lb the NAV of U is greatly increased.
$17 was indeed quite a premium, as U often trades at a premium compared with its NAV, however that premium has now all but disappeared as the NAV of U is $886,279,870 and its market cap is $890,815,233 suggesting that now is a good time to Buy or add to existing holdings.
We also are stockholders and plan to hold for the long term.

April 25, 2007 | Unregistered CommenterUranium Stocks

hi guys - really enjoy the site and appreciate the insights and thoughts. however I cannot make sense of the maths you use in this article - please can you explain how you reached your conclusions....in the NAV statement for 31 March the company states it's investments to be worth CAN$ 744 mill yet it quotes it's NAV to be CAN$ 631 mill. Undiluted CDN$ 13.02 per share and diluted CAN$ 12.38 per share - how do you get to your figures?

thanks

April 26, 2007 | Unregistered Commenterbob

Hi Bob,

The estimates used in the report of March 31st were using uranium prices of $95/lb which was the current spot price for U3O8.
We simply scaled up the value of their investments to incorporate the higher uranium price, $113/lb, to generate our figure of the NAV.

April 27, 2007 | Unregistered CommenterUranium Stocks

I thought that might be what you did - to my untutored eyes you've overstated their assets and it would be better to take their stated NAV per share of CAN$ 12.38 and multiply it by 113/95 giving a NAV of CAN$ 14.72......Having said that I agree with you that it appears to be good value, though there is maybe some uncertinty as to how the new NYMEX contract will affect the Uranium ETF's.

all the best

April 27, 2007 | Unregistered Commenterbob

Its now up 7.36% since we said "add to holdings" in 18 days which is reasonable progress.

May 12, 2007 | Unregistered CommenterUranium Stocks

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