Wednesday, May 21, 2008 at 03:44AM
This chart is courtesy of www.U308.biz.
This has been a much better month for holders of uranium stocks, as signs of rising stock prices appear to be popping up here and there. Yesterday was especially good with the following stocks leaping to higher levels: RSC: 17.14%, LAM: 16.58%, MGA: 6.79%, KRI: 22.73% and URE: 22.16%.
As regular readers know we decided to adopt a strategy of grin and bear it and not sell any of our stocks and subsequently register the associated loses. Our portfolio has been hammered, however we took the view that the downside was now limited and we kept buy signals on both Laramide and Mega Uranium, which have both made nice gains.
Cameco Corporation – Watch
Cameco was trading at $35.08 when we last updated the portfolio and closed at $42.48 yesterday, good progress by this sectors heavyweight. CCO also recorded profits of
$133 million compared than last year's $59 million, however this translates into a profit of 39 cents a share and came in below forecasts. For example, a Bloomberg survey had Cameco profits at 43 cents a share. We don’t own this stock.
RPT Uranium Corporation – Hold.
We bought RPT on the 19th February 2007 for $0.42 and sold it for $0.62 on the 13th June 2007 for a profit of 47.6% in 4 months. We still like this stock and so bought it back at around 50 cents, however RPT closed at $0.16 yesterday, again pretty much sideways movement.
Uranium Participation Limited – Hold
U is trading at C$9.60 having been as low as $9.00 recently. We bought at $11.97 on 21 November 2006 so U is still showing a paper loss but we will continue to hold, as it offers direct exposure to uranium without the risks inherent in mining.
Strateco Resources Incorporated – Hold
We made a small investment in RSC at $2.30 and it has traded as high as $2.87, however it closed at $2.05 yesterday, being up 17.14% on the day. The news flow has been good so we expect this stock to do well as this market sector regains its popularity with investors.
Crosshair Exploration and Mining Corporation Watch
We continue to watch CXX. The stock was trading at about $0.86 and has seen some dramatic moves in both directions, it close yesterday at $0.82. We had hoped that CXX had found some support at $1.00 but that soon dissipated. The news flow has been good and frequent so this rapid deterioration remains as a puzzle to us. Although we do not own this stock it remains tempting at these price levels.
Laramide Resources Limited – Buy
This stock was trading for about $3.63 at the time of the last update it and closed yesterday at $4.67. It should be noted that most of this gain came during the last two trading days. We bought at $5.78 on the 28 July 2006 so we are still in the red with this one. When we were sitting on a paper profit of around 80% we sold half in order to buy other uranium stocks, as we needed a bigger spread of stocks at the time. In the last update we said that Laramide may have formed a bottom at $3.00 however we need a little more time for a confirmation, it now looks as though the bottom has been formed so hopefully we can look forward to better things from this stock.
Mega Uranium Limited – Buy
We bought MEGA at around $4.0 on 27 July 2006. MGA was trading at $2.38 last month but has since dropped back to close at $2.36 yesterday, having traded as low as $1.79. Hopefully Mega has found some support at $2.00, and can go on from here to higher ground.
Khan Resources Ltd - Hold
We bought Khan on the 5th March at $3.63 and it has since dropped to $1.08 due to licensing issues with the Mongolian regulators. So, in anticipation of Khans management team finding a resolution to this problem we decided to buy again. (See Khan Resources: A speculative buy) the stock rallied and we took a profit of 15% in a matter of days before the stock fell back again. Khan is having a torrid time trading as low as $0.85 before yesterdays jump pushed it up to $1.08. We are still holding this stock and wearing a hard hat at the same time.
Aurora Energy Resources - Hold
We bought Aurora on the 5th March 2007 at $14.17 and it is now trading at $4.50, having traded as low as $3.45. Aurora has implemented an outreach programme in an attempt to convey the benefits of their planned mining activities to the community. A resolution to the issues surrounding the granting of a mining license is desperately critical to their activities in the Central Mineral Belt, so lets hope that they are successful.
Strathmore Mineral Corporation - Hold
We bought STM on the 14th April 2007 at $4.96 and it is currently trading at $1.80, having been as low as $1.40, which is a very disappointing performance indeed. STM needs to continue this mini rally and regain the confidence of investors.
Ur-Energy - Hold
We bought Ur-Energy on the 23rd April 2007 at $4.75 and we also gave a second buy signal on the 24th August 2007 when we acquired more stock at $3.03. In the last update we asked is this the low for URE as it was down to $1.78, well it could have been as this stock is showing signs of recovery and closed yesterday at $2.15, bringing with it some light relief!
Denison Mines Corporation – Watch
We don’t own Denison (DML on the TSE) despite trying to buy it when times were better. Recently this stock put in a run to break the $9.00 level only to fall back again to $6.85, before rallying again to close at $8.59 yesterday. We will continue to watch for the now. If you can handle the volatility then this is the ride for you.
This tiny sector has been hammered so we are pleased to be able to bring you slightly better news. In the last update we said:
“However being a small market sector and thinly traded, suggests that when the market perception improves these stocks could move up the ladder with some speed. We have already witnessed the odd uranium stock jumping up by 20% in a single day, as trigger-happy investors did not want to be left behind.”
This is now happening as uranium stocks are moving higher in numbers and not in isolation, which bodes well for us. We know that it has been a really torrid time for investors in this sector but we don’t think that now is the time to sell. The stocks are showing signs of life and some are starting to really kick. We could sell now and register the losses but our belief in the nuclear story remains unchanged so we are sticking with it.
The longer-term price remains strong at $95/lb but the spot price continues to cast its dark shadow on things as TradeTech reports the uranium spot price trading at $60/lb accompanied with the following commentary:
“Two transactions were concluded this week in the spot uranium market with prices at, or very near, today’s spot price indicator. While there remains an undercurrent of uncertainty about future price direction, buyers are beginning to venture back into the market and sellers are less willing to cut prices. One factor contributing to this change in behaviour is the expectation for large volumes of demand to return to the market in coming weeks and months, as rumours continue to swirl about potentially large purchases from the investment community. However, significant demand from this sector of the market has yet to surface. TradeTech’s Uranium Spot Price Indicator remains unchanged this week at $60.00 per pound U3O8.”
We hope that the importance of the spot price diminishes and the focus of attention becomes the long-term price, as this is where the lion’s share of the trade in uranium is conducted.
If you have any comments or suggestions then please feel free to add them to this article whether you agree with us or not.
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Looking further a field we spotted this report by Reuters in London: “The FTSE 100 FTSE share index closed 2.9 percent lower on Tuesday, 20 May snapping a four-day rally as investors dumped overheated mining stocks, while U.S. data and surging oil prices underscored inflationary concerns.”
Up on one exchange and down on another!