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Cameco (CCO)

68K views 203 replies 47 participants last post by  james4beach 
#1 ·
The slaughter just seems to continue with uranium producers. Cameco is now at 19 and sporting a pedestrian PE of 17 with a dividend yield around 2%. It is almost looking like a value play now despite an earlier run at 45.

It is now actually close to its 2009 low.

I know some are really down on Uranium but Japan has only talked about moving away from Uranium - I don't know if they'll be able to do it. Germany has long-range plans about not pursuing more nuclear power plants but again it remains to be seen what they'll do. Meanwhile we know that India and China are continuing to build more plants. We also know that current uranium production is insufficient for existing uranium use with the gap filled from decommissioned nuclear arms warheads. However, those warheads are now also running out.

I think this is a good opportunity for a long-term contrarian bet but I would wait for a more solid bottom to form as these guys just continue to sink. Cameco is the strongest player in the field and they have the hedging programs in place to ride out any weakness in uranium spot prices. They also seem to be intent on trying to expand with the hostile takeover of Hathor. I also wonder if they make a play on Denison Mines with their stocks down about 75% from their yearly high and trading at 1.19 now.

I guess I'm ready to jump in once the knife stops falling. Are any of you guys about ready to wade in?
 
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#39 · (Edited)
Sarcasm aside, CCO isn't a typical purchase for me, seeing as how their returns aren't great, the dividend is low and they've had operational struggles (see:Cigar Lake). I bought CCO because I think Uranium is a good long-term play given all the nuclear reactors expected to come online in the next 10 years coupled with diminishing amounts of uranium provided by decommissioned nukes. I think their recent acquisition spree will set them up well, considering the acquisitions were made at a time when spot uranium prices are under $50, compared to $137 just 5 years ago. Uranium is also a very clean form of energy in an increasingly environment-conscious world. CCO has some of the best uranium reserves in the world and pay very low royalty rates so I think they're a good bet on uranium long-term.
 
#41 ·
I put an order in for some more CCO.

This is a great opportunity for them and I believe they have been handling it well.

They are the biggest and strongest Uranium producers around and have lots of low cost Uranium that they can sell. Moreso, whereas some of the smaller companies live and die in the volatility of the spot market, most of Cameco's production goes into the long-term market with prices fixed long ago and thus provide a more steady earnings stream. While the stock will not jump as much on a quick spike in the Uranium market, their ongoing earnings stream will allow them to buy out struggling Juniors with good properties but starved of capital at bargain basement prices. They can then hold onto those properties and start developing them later when the market is more firm and they can be developed profitably.

I am very sure there will be a large Uranium bull market very soon because the supply crunch is coming between the lack of investment by Juniors due to low spot pricing, the increasing demand from Nuclear power plants being built and the lack of true shutdowns that are actually happening and the expiration of peace treaty agreements that saw old Russian nuclear warheads decommisioned and then used as feedstock for nuclear reactors. So you can see the supply mismatch coming and the last time this happened the stocks shot up to the moon. We may not get as big a response this time in the share prices because the market will remember the last Uranium crash but we may get a more stable and higher Uranium price that will markedly increase the earnings power of Cameco which will translate to capital gains and increased dividends. Because of the acquisitions we'll have acquired good properties whose price will have appreciated and we can sell them or develop them when the time is right.

Now is a good time to buy Cameco, IMO. It may go down some more but probably not more than 15% from here and I would continue averaging down if it happend. I do think the stock is likely a double in two years from this price. All they have to do is finally get Cigar Lake going and then wait for the market imbalance to happen.
 
#47 ·
I think they will cover later in the day. Going to grab some more today at lunch lol..
You mean recover? :)

The recent downgrade 'to hold' and price target slash didn't help; the stock is oversold, but don't let that make you anxious, if you're in for the long-term.

And about seeing your 'doubles' turn back to a loss, or to same price as you purchased, you're not alone, but look at it as an accumulating opportunity.
 
#49 ·
1. i meant shorts will cover lol.
2. i wonder how much did they spend on creating these negative publicity for nuclear power. like running ads on tv and all.
1. Yes, I know; you didn't get my humour [no wonder, i suck at it]. :wink:
2. I pay attention to the facts, not the noise. Btw, I find the IAEA site informative/interesting.

http://www.iaea.org/
 
#61 · (Edited)
now the weighting is around 35% of my portfolio with average price just under $23.
I'm bullish myself, but 35% is way too much, even when you're buying a quality stock at a fantastic ACB. I would not even have this allocation in AAPL stock.

Making adjustments according to significant negative/positive moves in the market, is the right thing to do, but don't go overboard; there is more to stocks than just uranium.

There are other stocks trading at year and all time lows as well.

You don't want 'to sleep under a bridge' while you wait, do you? :02.47-tranquillity:

thenegotiator: LOL, but yes, I am keeping CCJ/CCO like a 'newborn' and giving another for adoption [trading]. :biggrin:
 
#60 ·
Now 35% is what I call a conviction play.

Might I suggest that if the stock gets back up to 22 and change that you lower your concentration in this holding. Then you'll have more ammunition to go long on the next dip that happens.

My avg price is around 22 but it's more like 3% weighting overall. I'd definitely buy more if it dropped some more from here but not until it hits 18. Until then I'll just bide my time and continue to collect the dividend.

The story behind this stock just has to pay off in the next 2 years. There is going to be a huge mismatch between uranium supply and uranium demand with all the new reactors coming online and the lack of investment in this space due to low uranium spot pricings from the Japanese tsunami. Cameco is the strongest uranium company out there, they are about to get cigar lake online, they have been acquiring some juniors, their profits are largely protected on the downside from their long-term contracts so they can take risks that others can't.

I have also added a bit of an income stream from CCJ by selling some 17 puts for Jan 2014. I'll sell when the stock bounces off these lows.
 
#62 ·
I hold small position in ETF URA Global X Uranium and in losses big time. This ETF biggest holding CCO with 17% allocation, ... in a long term I'm bullish on U... was thinking to sell what is left in URA and buy CCO... at least thus I can get 2%+ dividend while waiting....URA has no dividend...
 
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