Cameco Corporation nearing a bottom?
Tuesday, November 11, 2008 at 5:17PM
Uranium Stocks in Uranium Mining Stocks
Cameco Chart 12nov08

We’ll start with a quote from Jerry Grandey, Cameco's president and CEO:

"Cameco is blessed with high quality customers whose requirements for uranium are independent of the state of the global economy. Since nuclear is among the lowest cost generators of electricity our customers will continue to operate their plants to meet base load electricity requirements,"

However these fine words did little for Cameco’s stock price, which fell 5.22% today to close at $18.71. The third quarter net earnings were 46% lower than in the third quarter of 2007. Interesting to note that revenue was 18% higher than in the second quarter of 2008 at $729 million in this quarter of 2008. This was largely due to increased volumes in the uranium albeit at lower prices, fuel services, electricity and gold businesses. To read the report in full please click this link.

The question we wrestle with is; is it at or at least close to the bottom yet?

The above chart shows that Cameco has traded as high as $59.90 to a low of $14.33, followed by a short rally to $22.50 and now back to $18.61. The technical indicators have been at both ends of their respective ranges in what has been a roller coaster ride for investors.

The long-term price for uranium is holding at $70/lb and the spot price is $46/lb, which is up ever so slightly. Should uranium prices start to rise we could witness a rush back into this sector, however we think it is too early to discern an upward trend. Cameco should benefit, however, the shadow of Cigar Lake with its water ingress problems still hangs over the company which puts a bit of a damper on the stocks progress. Not for us just yet.

Cameco Corporation has a market capitalisation of $6.45 billion, a P/E ratio of 15.52 with 344.47 million shares outstanding.

Cameco Corporation trades on the Toronto Stock Exchange under the symbol of CCO and the New York Stock Exchange under the symbol of CCJ.

Have a good one.

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