USEC, Inc. (USU)

RawInstinct (< 20) Submitted: 10/15/07 6:35 AM : Start Price: $9.40 USU Score: -13.63

Attractive valuation compared to its peers (12x Est earnings, 0.5x sales, and 0.9x book value), the stock has been unfairly beaten-down owing to few factors mentioned below. Moneyflow has risen sharply following the recent decline and many major holders have increased the stake until the last quarter. Heavy option activity in past couple of weeks, seeing interest in - $12.50 and $15.00 January 2008 calls and also in Oct 2007 $12.50 call indicating near-term upside potential. The company also sells almost third of its output outside the US and should benefit from the Dollar weakness.


Nuclear energy is widely expected to see a major revival in its fortune following recent spike in Oil prices and also countries like China and India who are building new plants are expected to increase the demand. Though Uranium prices have dropped from their recent peak, the outlook still remains much attractive.


Chart: Technically, $8.75 seems to be a strong long-term support for the stock from which it has bounced back almost 7 times since late 2004.

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