Cameco Corp (USA) (NYSE:CCJ)

somebody mentioned the word five-bagger

Hey, at least it's not coal.

Cameco has had an apparent fall from grace. This stellar performer that once traded for only $3 a share now sits at $40. The problem is that not too long ago it was at $58 and many of the investors who put their hot many in at the end of a run were disappointed. No one could see the decreased demand for uranium going forward, but the price has been pushed downward. Many investors believe that uranium is far to risky as not many know the entire uranium story and even fewer have a grasp on supply and demand of the commodity. Cameco is by far a much less risky investment when looking at the group as a whole. Even as the spot price (which CCJ has very little exposure to) decreased from $136 to $95 per pound, they raised their dividend 20% which is the fifth increase in six years. They also increased their share repurchase by $400 million.

The price of uranium is key to Cameco, but they are anchored by legacy contracts. They developed these contracts to protect their downside with respect to uranium production. Not too long ago, the United States and Russia decided to begin dismantling their huge nuclear weapons arsenal. By doing this, they completely crushed the price of uranium on the market. The legacy contracts provided utilities with a supply of uranium and Cameco was afforded limited downside to pricing. It has also functioned in limiting upside. As many uranium companies saw unbelievable growth, Cameco lagged. With the recent decrease in spot price the same thing was seen although reversed, as their stock has held up well and companies like URRE saw their stock price decrease much more rapidly.

Even with the decrease in stock price Cameco had a great year. They saw their cash from operations increase 92%. Revenue was an all time high increasing by 26%. Net earnings increased 11%, but were hit hard by increased costs. Adjusted net earnings were up 120%, and was also an all time high. Much of this was attributed by the uranium spot price doubling. Their realized price increased 34%, as shown through the legacy contracts. These gains were also seen with decreases in production across the board. Uranium concentrate was down 5%, fuel services decreased 16%, electricity was down 9% and gold production decreased 5%.

When looking at nuclear power it has grown exponentially through out the world as the United States has found other methods. It is the third leading generator of electricity behind coal and hydro at 16%. Cameco can meet any upcoming need as they look to increase uranium production by 80% in the next 8 years. The best way to understand exactly how much uranium production will have to increase is to look at current nuclear reactors and how many are planned or being built through 2017. Currently, there are 439 nuclear reactors and 93 are being planned or started to be built in the next 10 years. The United States is planning only five, but China has 23 on the books while India is looking to build 15.

Cameco hit a double top breakout on May 8th, and has a bullish target of $53 with respect to their current trend. It looks like the stock will first take resistance at $50 so I would take profits at $49. Look for at least an 8 million volume day to break resistance and become support. The 50 day simple moving average has been broken.

CCJ currently trades at 19 times forward earnings. There are only two analysts covering the stock and I believe this will be a breakout year. Last year earnings were only $.14, which was a large miss. This was do to shipment dates with respect to their fuel services. I believe this quarter will be different as the company was reeling from one problem after another this year and they will crush earnings. I am looking for $.40 per share on increased gold prices and uranium production. Plus, the legacy contracts had an immediate increase in pricing for uranium at the beginning this year not currently reflected in share pricing. Full year expectations should be even better with more production coming on line in the third quarter.

Low cost uranium supplier, with the best quality reserves, and large quality of reserves, for a commodity that is in demand, where production lags demand.

energy! The world cannot afford to continue to grow at this rate if its fueled only by oil. What do you think?

Should be a five-bagger in as many years. Ask Evlampius.

Uranium will be the new oil

Uranium mining

Uranium is relatively cheap, HEU downblending won't last forever, and cigar lake is a massive project.

U

Increased gap between energy demand and oil's ability to meet it = need for new energy. Need for new energy + green sentiment = Nuclear energy. Nuclear energy = success of lardgest uranium producer in the Western Hemisphere.

nuclear is the only thing to replace oil energy; we can rid ourselves of waste. Sending it to the moon. Most efficient and reliable energy source; also clean green! Sweetdreams

Uranium, baby! Like it or not, nuclear is compelling.

Uranium is not going to get cheaper. This is the big one. Nobody can come close to Cameco, which is hard to do in most other industries. If you want some exposure to uranium, and you should, this is the safest way to go and it will perform very well when the price starts its next vertical leap.

Stock is down over 35% from its summer high. New mine is on schedule to be on line by next year and uranium demand should increase as nuclear plants come on line.

I live right outside of Washington DC and talking with my buddies who work in the energy sector off of Pennsylvania Ave (a mile away from the White House) there will be new plants being built all across the US that will be backed up by ANY Presidential candidate because we will have no other choice... Right now stock is around 32.59 a share... Look for it to reach in the 70-80 range within the next 3 years!!!

Uranium (nuclear) will be popular again with a Democrat president. Schwarzenegger discussing California nuclear again also. Electric cars means electricity demand.

In the long term nuclear power is going to be huge. You can also grab this one in the TSX under 'CCO' (which I did). I prefer Vermont maple syrup but you can't deny the Canadians know their mining

Cameco mines the uranium needed for all those reactors to be built. Contracts in China are just the start for the future performance of this Canadian company.