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« Uranium Spot Price Fluctuations | Main | Uranium Stocks: Stirred but not Shaken! »
Thursday
Aug092007

The Uranium Stocks Pullback: Have We Ever Seen Anything Like This?

This pullback in uranium stocks has stirred the industry and indeed has shaken out many investors who understandably could not stay and watch there uranium stocks crumble down anymore.

However seasoned and experienced investors will have seen these pullbacks before, whether it be in uranium or other stock market sectors. To those who are new to the uranium industry we are taking a look at the history of some uranium stocks to see if such a dramatic pullback has ever happened before.

The answer is a resounding, Yes. One only has to go back to last year to see the massive correction in uranium stocks across the board as they were hit by seasonal selling.

Take a look at SXR Uranium One. Back in 2006, SXR took a large 38% correction beginning in May and the stock did not get going again on until after the summer.

The Uranium Stocks Pullback:SXR

One could have sold in this correction, but holding out would have proved to be more profitable as SXR reached highs of $18.65 this year.

If we take a look at Laramide Resources at about the same time last year we can also see that a large correction took place, as Laramide plunged 52%.

The Uranium Stocks Pullback: LAM

Since this correction Laramide has reached $16.70 so holding onto your shares has worked out profitable over the longer term and buying on the pullback even more so. This is why we think now, during this pullback, is a good opportunity to buy more shares in quality uranium stocks if possible.

The same is true for Mega Uranium as it suffered a 60% pullback, but it has risen to nearly $8.98 since and buying on the pullback in the $2 range appears to be a very good investment in hindsight.

The Uranium Stocks Pullback: MGA

The point we are trying to demonstrate is that this has happened before in this uranium bull market, and will probably happen again, as pullbacks are the compulsory companion in bull markets. These times should be veiwed as an opportunity to add to your holding in uranium stocks. It is perhaps worth noting that many uranium stocks are now roughly what they were when they made a high last year. This may be significant for two reasons. Firstly this line that acted as a resistance last year could provide some support now. Secondly, and perhaps more importantly, uranium was changing hands for about $40/lb when the uranium stocks made their high last year, and today even the long term indicator is $95/lb and the spot price is $120/lb!

We think now is the time to buy more uranium stocks and buying on pullbacks is a good way of making serious money in bull markets such as the current one in uranium stocks. For ideas on which uranium stock to invest in take a look at our free portfolio and stay updated and informed by subcribing to our free Uranium Stocks Newsletter.

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Reader Comments (4)

As someone who went through this pullback last summer, I know the rewards of riding it out. Given that the U.S. is dumping uranium on the market, causing a drop in the spot price, and the general stock-market weakness of late, I'm not really suprised at all.

What I would like to know is why is the uranium market so seasonal??? Is there something about the summer that is specific to the nature of uranium mining? Maybe the summer is the best time to do mining? Then, in the fall, when the results are in of the summer drilling season, investors have a clearer picture of what these different mining companies are worth.

I don't know, exactly. All I know is next April I'm selling and I'm not buying again until late August. It would definetely be worthwhile if someone out there could figure out if this trend is coincidental or if there is a real reason for it.

Everyone stop chickening out!!! This is the nature of thinly traded stocks!!! You're making the mistake of selling too low and giving up profits in the future. You don't lose money until you sell. The fundementals of buying uranium mining stocks are solid and you are all going to want back in at somepoint.

August 9, 2007 | Unregistered CommenterSteve Jackson

I agree, we are still in a Bull market despite small pullback in Spot price. The correction has hit U stocks hard but most sectors are suffering of late as a result of US sub-prime termoil. I continue to hold a couple of large positions, EFR-to in particular and add when possible. It should be noted the large run in most U stocks last fall followed Cigar Lake and nice moves in spot market - hope for similar catalysts this fall!?

ps - Great site :)

August 9, 2007 | Unregistered CommenterLoonee

Thank you for your article. I have invested in Central European and Chinese market earlier and i had really good experiences but i have bought powertech uranium stocks (pwe) in april which have fallen around 60% since my investment. Your article was really helpful for me, now i can understand better the situation and i can persist, wait a lot, and think less about my adventures in uranium stock market. Do you have some idea what could be the first sign of recovery and starting a new uptrend? but maybe nobody knows.

August 11, 2007 | Unregistered CommenterAndras Rung

All anyone would need to do is check the year-to-year movement in MGA (Mega Uranium). "Risen to $8.98" ? What the hell are you smoking?

October 2, 2007 | Unregistered CommenterJim Martocci

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