Cameco SELL

CCO : TSX : C$23.67
CCJ : NYSE
SELL 
Target: C$20.50

COMPANY DESCRIPTION:
Headquartered in Saskatchewan, Cameco is the world’s largest supplier of uranium and a significant fuel conversion services supplier. Cameco operates uranium mines in Canada and the US and uranium conversion facilities in Canada. The company also owns a 100% interest in NUKEM, a trader and broker of nuclear fuel products and services.
All amounts in C$ unless otherwise noted.

Readers of this blog and my book The Apprentice Millionaire Portfolio ( available from Amazon.com)will well know my take on the sector and this stock. Yet I still receive emails calling or the rise of the Nuclear Phoenix . Not gonna happen this year .

Metals and Mining — Base Metals and Minerals
DOWNGRADING TO SELL, MOSTLY ON RECENT SHARE PRICE PERFORMANCE
Event
Cameco has agreed to sell its 31.6% stake in Bruce Power LP for C$450 million. While we welcome the cash injection, we note that BPLP contributed 30-20% of our previous 2014-2017E operating cash flow forecasts for Cameco, and we believe the transaction is NPV-dilutive.
Impact
Our revised 2013-15E adjusted (for Bruce Power) EBITDA forecasts are C$837 million, C$483 million, and C$593 million and compare to C$837 million, C$754 million, and C$870 million prior. Our revised 2013-15E adj. dil. EPS forecasts are C$1.20, C$0.63, and C$0.89 and compare to C$1.20, C$0.95, and C$1.22 prior. Our revised NPV8 estimate of C$16.84 is down from our previous NPV8 estimate of C$17.50.
Action and valuation
We are downgrading our recommendation from Hold to SELL, and maintaining our 12-month target price of C$20.50, which is based on the average of: i) 15x (up from previous 12x) our 2015E EV/EBITDA, which would imply a share price of C$20.30, and ii) 1.25x (up from previous 1.0x) our NPV8 estimate of C$16.84. While the downgrade is mostly due to recent share price outperformance, it also reflects our view of earnings and NPV dilution from the Bruce Power sale. The higher multiples reflect market anticipation of positive uranium market news flow.
Next potential catalyst and investment risks
We believe that the equity market has already moved to reflect the asymmetric news flow risks of 2014, with initial Japanese reactor restarts highly likely, and spot uranium prices likely already at bottom-of-cycle. However, we believe that the market remains in fundamental surplus, and with continued excess Japanese inventory build.

Build Your Portfolio On A Solid Foundation : All You Need To Succeed – in 500 pages of Investing Strategy and Selections


Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic:

Building Your Apprentice

Millionaire Portfolio

 All you need to succeed in today’s stock market [Paperback]

Jack A. Bass (Author)

5.0 out of 5 stars  See all reviews (2 customer reviews) | Like 1678

Price: $28.95 & this item ships for FREE with Super Saver Shipping

All You Need To Succeed – in 500 pages of Investing Strategy and Selections


Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic:

Building Your Apprentice

Millionaire Portfolio

 

 All you need to succeed in today’s stock market [Paperback]

Jack A. Bass (Author)

5.0 out of 5 stars  See all reviews (2 customer reviews) | Like 1678

Price: $28.95 & this item ships for FREE with Super Saver Shipping

All You Need To Succeed – in 500 pages of Investing Strategy and Selections


Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today’s stock market [Paperback]

Jack A. Bass (Author)

5.0 out of 5 stars  See all reviews (2 customer reviews) | Like 1678

Price: $28.95 & this item ships for FREE with Super Saver Shipping

Uranium Sector Update : Hope Keeps The Lights On

English: "Satsop nukes" seen from ne...

English: “Satsop nukes” seen from near Satsop, Washington, USA. Cooling towers, Satsop Development Park. (Photo credit: Wikipedia)

DENISON MINES (T-DML) $1.37 -0.06
URANIUM ENERGY (US:UEC) $2.09 -0.05
UEX CORP. (T-UEX) $0.50 +0.03
URANIUM PARTICIPATION (T-U) $5.18 +0.07
PALADIN ENERGY (T-PDN) $0.98 +0.01
Go to a mining conference, turn on the business TV channels or visit the websites and for those still interested in the beaten up resource sector, uranium seems to be getting much of the attention.
Reading the charts seems to be high profile types such as Rick Rule of the Sprott Group or Marin Katusa of Casey Research. Also enjoying the times a little more is David Talbot, the uranium analyst at Dundee Securities and also an analyst with a big following since Hathor Exploration.

Mind you, this still has not been a good sector to be in for much of the last two years since Fukushima. All that may be changing as the Japanese make decisions some time in the next 4-8 weeks on if and when some of their nukes will be turned back on. In the real world of economics, the Japanese currently buy almost 30% of the LNG produced at a price almost triple to  quadruple what North American prices are. It makes the cost of power in Japan outrageous, but hey, it isn’t just Japan. We have all seen the pictures of those dirty, choking fogs caused by coal plants in China and we know they need an alternative. That is why, despite Fukushima, there are now more nukes planned to be built since before that terrible event.
Currently 160 new plants are planned and 320 are proposed. But timing is everything and if the Japanese do go ahead, the current bump in uranium stocks could continue.
And if they don’t? Well, the next big event is the ending of the HEU Agreement with the Russians—the big supplier of uranium for reprocessed old A-bombs. They will want higher prices come year-end and don’t have a lot left. Meanwhile, there are very few uranium miners that can  make money at the current spot price of $40.00 and very few new potential mines would make sense at the long-term price of $60.00. (Most new ones would need at least $65.00 to consider financing).
There are currently only a handful of publicly traded companies compared to the last boom when there were almost 500.

Marin Katusa has been leading the charge for the Casey Group, organizing some rather high-profile panelists to talk about the nuclear future and is a big believer in the coming cycle. He also points out the Islamists who bombed the Areva mine in Niger knew what they were doing and suggests that mine won’t be up and running for a while. He also points out that if the Japanese do decide to switch back to nukes, that would greatly affect the need for LNG and have potentially large effects for proposed American/Canadian LNG export facilities.
When we ask Katusa for some stock picks, he suggests one of them—low risk—with no permitting problems or the typical problems with mining and that is Uranium Participation which he would buy for his mother! He suggests it trades at a discount to its value and importantly, has some uranium hexafluoride in its assets which he believes down the road, is going to be important. Something of medium risk that he would buy for his
wife would be Uranium Energy, the American-based company whose assets he feels are significantly undervalued. He also points out that Russians now own more nuclear assets in the United States than Americans do (20% of all power in the US, now comes from nuclear power and half of that depends on the old Russian A-bombs whose supply ends at the end of this year).

For a pick for those accepting high risk, he goes with Skyharbour Resources in grabbing promising land areas.
We catch up with the very busy Dave Talbot, with another merger in the sector today as Rockgate and Mega Uranium agree to merge. We did get his top three picks at this moment.
He goes with one that has already created a lot of excitement— Fission Energy and also UEX and Paladin. We should note that Katusa has already played Denison and Fission and is looking to get back into both should they retreat…for whatever reason.

The Need To Succeed – in 500 pages of Investing Strategy and Selections


Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic: Building Your

Apprentice Millionaire Portfolio :

All you need to succeed in today’s stock

market [Paperback]

Jack A. Bass (Author)

5.0 out of 5 stars  See all reviews (2 customer reviews) | Like 1678

Price: $28.95 & this item ships for FREE with Super Saver Shipping

Step Up Your Game – All You Need To Succeed – in 500 pages of Investing Strategy and Selections


Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic: Building Your

Apprentice Millionaire Portfolio:

All you need to succeed in today’s stock

market [Paperback]

Jack A. Bass (Author)

5.0 out of 5 stars  See all reviews (2 customer reviews) | Like 1678

Price: $28.95 & this item ships for FREE with Super Saver Shipping

All You Need To Succeed – in 2013 – 500 pages of Investing Strategy and Selections


Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic: Building Your Apprentice Millionaire Portfolio :

All you need to succeed in today’s stock market [Paperback]

Jack A. Bass (Author)

5.0 out of 5 stars  See all reviews (2 customer reviews) | Like 1678

Price: $28.95 & this item ships for FREE with Super Saver Shipping

Uranium Sector Update

A billet of highly enriched uranium that was r...

A billet of highly enriched uranium that was recovered from scrap processed at the Y-12 National Security Complex Plant. Original and unrotated. Source: http://web.em.doe.gov/takstock/phochp3a.html (Photo credit: Wikipedia)

Paladin Energy* (PDN : TSX : $1.20)
Denison Mines* (DML : TSX : $1.43)
Cameco* (CCO : TSX : $20.87)

With news out Mondaythat one of the world’s largest publically-traded uranium producers has received a take-private buyout offer from its majority shareholder, shares of other potential targets were moving higher.

A common word used Monday by analysts commenting on the news was scarcity. There were already a limited number of high-quality uranium producers and established developers with world-class assets, and now if the take-private offer announced Monday goes through the supply of those type of companies will be even more scarce. Given that scenario, one Bay Street analyst highlighted that growing mid-tier producer
Paladin Energy will be the largest producer left and available for a take-out.

While another Bay Street analyst covering the uranium sector, stated that the most important read-through from Monday’s news is that the multi-billion take-private offer “speaks to the upside of the uranium space and companies with access to high quality uranium resources and production.”

The analyst noted that the news “should serve as a wake-up call to the current, under-valued level of uranium equities and should
also bolster the scarcity value of the few remaining investible uranium equities.”

The Discilpline To Profit :All You Need To Succeed – in 500 pages of Investing Strategy and Selections

The selections given are all guided by the AMP book.

I am puzzled how many readers expect to profit if they don’t know the  underlying strategy/ sector and individual selection criteria .

You cannot ” win” unless you know the rules of the game . Gambling that one selection will better your average is not a strategy at all.

I is notas difficult as brain surgery – you need a long term strategy and the selections that meet that strategy.

 

Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic: Building Your

Apprentice Millionaire Portfolio:

All you need to succeed in today’s stock

market [Paperback]

Jack A. Bass (Author)

5.0 out of 5 stars  See all reviews (2 customer reviews) | Like 1678

Price: $28.95 & this item ships for FREE with Super Saver Shipping
Follow

Get every new post delivered to your Inbox.

Join 2,154 other followers