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A global energy company that supplies low enriched uranium for commercial nuclear power plants.
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JDC33D (< 20) Submitted: 4/17/08 2:16 PM : Start Price: $4.89 USU Score: 15.93
The mining industry is a very good sector to be in right now. Much of the worlds metals that were mined throughout our history are still in use somewhere today. Due to inflation, the metals sector is an excellent sector to be in, due to the fact as the dollar declines, metals such as gold will only increase in value. The nation will always need multiple forms of fuel as the price of oil continues to increase... so coal and uranium will keep looking like better and better investments.However, on the other side, metals always go through cycles. Starting around three years ago, we began our upward trend. While we will probably continue this upward trend for quite some time with the current market, one must realize there will be a large correction at some point. I would say that the metals/mining stocks will be good for at least a couple years.Being in the mining industry, I feel quite safe. Copper is doing amazing right now, as is gold and uranium. I feel safe in my position as an invester and an employee, which should say volumes about the status quo of the market.
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alexvb (44.27) Submitted: 4/17/08 3:06 PM
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USEC is not a mining company. They operate a uranium enrichment service. Part of their business is selling Russian uranium that used to be in warheads. Rising energy costs actually hurts them because their biggest cost is electricity.
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JDC33D (< 20) Submitted: 4/17/08 4:30 PM
My apologies... the description states: "A global energy company that supplies low enriched uranium for commercial nuclear power plants."According to the fundamental, one sentence description, are they not selling uranium? In an investment standpoint, USEC is an excellent bet as the cost of uranium is surely to increase as nuclear power plants are (in my opinion) the power source going to be most widely used in the future (next to solar, as nano solar panels are developed).Once again, I apologize for lumping mining and energy into one rant, but I feel they are highly connected.
alexvb (44.27) Submitted: 4/17/08 7:38 PM
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The uranium industry is strange. Power plants like to own the products at each stage. They buy uranium in yellowcake form from miners, send it to a processor to turn it into uranium hexafloride, send it to an enricher (like USEC) to enrich the U-235 content, then send it to another processor to turn it into usable fuel.After purchasing uranium from the miner, the power plany company contracts for each of these steps to different companies as a service not a finished good.USEC does benefit in the short term from cyclical a small amount. As fossil fuel prices rise, electricity prices rise giving nuclear plants an incentive to produce more electricity. However, once the plants are operate at their maximum capacity, there is no room to grow in the short term. Nuclear plants require a very long time to construct because of the safety and regulatory requirements.USEC makes sense as an investment in the long run if you believe that it can complete its centrifuge project and that nuclear power will expand in the future.
NuvoRiche (68.33) Submitted: 4/20/08 11:16 AM
USEC is to uranium refining as to VLO is to petroleum refining. Profit is derived from the spread between raw material (un-enriched UF6 with 0.7% U-235, the radioactive power-source-usable form) and finished product (3%-5% U-235). They are transitioning to the implementation of Gas Centrifugation technology, new to the US but which has been used in Europe for some time. This is the enrichment technology that is causing all the fuss over Iran. The unknown for USEC, which accounts for it's curernt stock price, is what will be the cost of building the enrichment factory in Ohio, and when will it be operational and producing product. Initial cost projection was $1.8B, now up to $3.5B. The competitive advantage that USEC will have if the project is successful is that it takes little energy input compared to the current Gasseous Diffusion technology (=production cost savings) and the gas centrifuges they have developed are amazingly efficient at purifying the saleable product (U-235). This will allow them to cheaply purify UF6 from ore, and to re-cycle U-235 depleted stocks of uranium. I am very interested in this company but am going to wait a bit for the risk picture to become a little more clear. It is definitely a long-term play, as it will be several years before they see any profit from the American Centrifuge plant.
alexvb (44.27) Submitted: 4/20/08 12:38 PM
USEC does not "purify UF6 from ore." The uranium part of uranium or is called yellow cake (mostly U3O8 but also UO2 and UO3). Though a chemical process, it is converted into UF6 by someone other than USEC. USEC then uses gaseous diffusion of UF6 gas to separate UF6 with a U235 atom from UF6 with a U238 atom.
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