Saturday, March 8, 2008 at 07:18PM
Judging from our mail bag Crosshair has many fans who frequently tell us to buy this uranium stock right now, as it won't go any lower etc. So we will take another look at one of this sectors favourite stocks.
Initially we bought Crosshair for $1.86 with the view to holding it for the long term when on 25th September 2006 we wrote:
“The company is currently exploring for uranium in the Central Mineral Belt of Labrador, where it has amassed a land position amounting to some 2740 claims, covering an area of 685 square kilometres. This area is regarded by a lot of commentators as the next big uranium discovery in Canada. The management team is also highly thought of and Canada is geographically and geopolitically as good as it gets.”
Since then we have sold Crosshair for $2.60, locking in a profit of around 40% as the stock ran to over $4.00, peaked and has struggled ever since.
If you are holding and tracking a portfolio of uranium stocks you will have noticed the recent upswing which lifted many uranium's off their recent bottoms and into a rally. We recently posted article on Denison when it was close to $6.00 and its subsequent rally to almost $10.00, notice that it has now backed off to $8.61. Its a similar story for this sector with stocks rallying only to have their progress hampered by what we think is profit taking by those who wish to be out and the rally presented them with the opportunity to cut their losses. We have no argument with this sort of activity as it effectively clears out the non believers making way for a sustained rally supported by those who already have a position and wish to increase their stake in the nuclear future and by those new converts who have yet to enter this market.
Taking a quick look at Crosshair's chart:
The technical indicators are heading south with the MACD displaying a negative crossover. CXX tried to join the recent rally with a move up to $1.60 but soon fell back to trade at $1.20 on heavy volume, which is the lowest it has been since August 2007.
With a market capitalisation of $87 million and 72 million shares outstanding it small enough to be buffeted around by speculators and fund managers alike, as a trading can amount to less than $1.0 million a day.
On the news front they have been active with the announcement of a C$15.00 million financing deal and the appointment of Paul Hosford, Professional Engineer, as President and Chief Operating Officer.
In conclusion we are not buyers at the moment but mere observers. Crosshair does appear to have suffered more than most and the downside would appear to be limited. However recent rallies have petered out and we need something to give Crosshair a lift. It could come in the form of the general recognition that the long term price of uranium has steadied at $95/lb according to Ux consulting even though the spot price is hanging around at $74/lb.
Crosshair currently trades on the TSX Venture Exchange under the symbol of CXX and on the American Stock Exchange under the symbol of CXZ.
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