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Uranium Stocks: Is the Rally Over or Just Beginning?

3/1/2012 7:29 AM
Penny Stocks by: The Bull Report

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THE BULL REPORT Uranium Stocks: Is the Rally Over or Just Beginning Written by Justin Kuepper ยท Source: SeekingAlpha - stocks may be well-known day trading stocks, but their secular moves are driven by very real fundamentals. Over the past month, uranium stocks measured by Tickerspy`s URANM portfolio are trading up 21.9%, which is some 16.9% higher than the S&P 500 (SPY).

But what`s really driving this trend and will continue over the longer term The uranium stocks included in this index are:

Cameco Corporation (CCJ) Crosshair Energy Corporation (CXZ) Denison Mines Corporation (DNN) Paladin Energy Ltd. (PALAF) Uranium Energy Corporation (UEC) Ur-Energy Inc. (URG) Uranium Resources Inc.

(URRE) Uranerz Energy Corporation (URZ) USEC Inc. (USU) Uranium Demand on the Rise in China Uranium demand may have slowed after Japan`s nuclear crisis - sending many stocks in this sector sharply lower - but it appears to be rebounding in some areas. Countries like China are seeking out cleaner energy sources, like nuclear power, as alternatives to its dirty coal power plants that provide the majority of its electricity.

In February, Canadian Prime Minister Stephen Harper signed an agreement - with China to facilitate uranium exports in a move that could be worth $3 billion by some estimates - . Worldwide, there are some 63 nuclear power plants under construction, with 28 of them located in either main land China or Taiwan, according to the Euro Nuclear Society - .

Investors are betting that the demand for uranium to supply these new reactors will offset the weakness in the past when Japan`s reactors went offline and increased industry supply. In 2010, the global uranium production was about 53.5 million kilograms, while consumption hit 86.1 million kilograms, and a uranium shortage could hit by 2016, according to Mineweb - .

A Quick Look at the Technical Picture Since uranium stocks are highly driven by traders, investors should also carefully consider the technical side of things before investing in the sector. The largest player in the industry is Cameco Corporation, which would provide the clearest technical picture for the industry being the most liquid investment in the industry.

From this chart, investors can see that the stock has broken through its 200-day moving average and rests on a key trend line from November 2011. The stock also rapidly broke through a descending trend line in January after a double bottom in October and December.

So, on a technical level, the stock (and industry) may be consolidating before a move higher.

Building Uranium into Your Portfolio There are many different publicly traded uranium stocks, but here are some that may be better than most for an average investor`s stock portfolio. Here are three suggestions:

Cameco Corporation - Cameco is the largest producer of uranium (~16% of the world`s production) with high-grade reserves and great margins. The company has a $9.2 billion market capitalization and its shares trade with a 20.45x multiple. Global X Uranium ETF (URA) - The URA uranium ETF has a very exclusive focus in the uranium sector, making it a solid and diversified pure-play on uranium prices.

However, the ETF is a bit illiquid and has just $186 million in market capitalization. Uranerz Energy Corporation - Uranerz is a development-stage opportunity for more growth-focused investors. With operations in the U.S. and a high-grade property in advanced stages, the company could be sitting on significant potential.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Compensation and Other Disclosures The content of this message is published by Uranerz Energy Corp. and sent to select email lists through Lake Group Media, Inc. ("Lake") to provide readers with information on selected publicly traded companies. Factual information is obtained from public filings and other sources deemed to be reliable; however, neither Uranerz Energy Corp. nor Lake takes responsibility for verifying the accuracy of such information and they make no representation that such information is accurate or complete. Certain of the statements in this Update may be considered forwarded looking statements. Uranerz Energy Corp. and Lake make no representation and provide no assurance or guaranty that such forward looking statements will prove to be accurate. See the company`s filings with the Securities and Exchange Commission for factors that may cause results to be significantly different. Statements of opinion and belief are those of the authors and/or editors of this Update, and are based solely upon the information possessed by such authors and/or editors; no inference should be drawn that such authors or editors have any special or greater knowledge about the company or companies profiled or any particular expertise in the industries or markets in which the profiled company or companies compete. The reader should verify all claims and complete his own due diligence before investing in any securities of the profiled company or companies. Neither Uranerz Energy Corp., Lake, nor anyone involved in the publication or dissemination of this Update is a registered investment adviser or broker/dealer. Uranerz Energy Corp. and Lake make no recommendation that the purchase of securities of the company or companies profiled in this Update are suitable or advisable for any person or that an investment in such securities will be profitable. In general, given the nature of the company or companies profiled and the lack of an active trading market for their securities, investing in such securities is highly speculative and carries a high degree! of risk.

An investor in such securities should be prepared and able to bear a loss of his or her entire investment. Nothing in this Update should be construed as an offer or solicitation to buy or sell any securities of any profiled company. Lake has been retained to provide direct marketing services for the company profiled in this Update and receives compensation for those services. Further, Lake and its employees and affiliates may own, or may purchase and sell, securities of the company or companies profiled. Lake undertakes no obligation to inform readers about the ownership or trading activities of it or its employees or affiliates in the securities of the profiled company or companies. Lake has the following compensation arrangements with the company or companies profiled in this Update: Lake receives an advertising fee ranging from $1,000 to $100,000 for each direct marketing list recommended and ordered for the dissemination of this Update.

This report is for information purposes only, and is neither a solicitation or recommendation to b_u_y nor an offer to sell securities. The Bull Report is not a registered investment advisor.

The Bull Report is not a broker-dealer. Information, opinions and analysis contained herein are based on sources believed to be reliable, but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. The opinions contained herein reflect our current judgment and are subject to change without notice. The Bull Report accepts no li_ability for any losses arising from an investor`s reliance on the use of this material. The Bull Report has been compensated Ten thousand dollars from LAKEGROUP for coverage of URZ. The Bull Report and its affiliates or officers currently hold no shares of URZ. The Bull Report and its affiliates or officers will pur_chase and sell shares of common stock of URZ, in the open market at any time without notice. The Bull Report will not update its purchases and sales of URZ in any future postings on our websites. Certain information included herein is forward-looking within the context of the Pri_vate Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning manufacturing, marketing, growth, and expansion. The words "may", "would," "will," "expect," "estimate," "anticipate," "believe," "intend," " project," and similar expressions and variations thereof are intended to identify for ward-looking statements. Such forward- looking information involves important risks and uncertainties that could affect actual results and cause them to differ materially from expectations expressed herein. *The Bull Report does not set price targets on securities. Never invest into a stock discussed on this web site or in this email alert unless you can afford to lose your entire investment.

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