CEA Monthly Issue – August 2015

Commodity: Uranium

Something very significant happened in the Uranium market this week…

For the first time since the 2011 Fukushima nuclear disaster, Japan has restarted its nuclear energy program.

That’s right, the Sendai Nuclear Power Station Unit 1 is the first of Japan’s 43 operable reactors to go back online.

As you may know, the global uranium industry was devastated after the Fukushima nuclear plant fell victim to a massive, earthquake-induced tsunami.  The commodity nosedived from just over $70 a pound in February 2011 to $28 in mid-2014 as demand fell off a cliff.

But after years of being out to pasture, uranium bulls are starting to stir…

The commodity is currently trading at $36 a pound- a 28% rally off the lows set in 2014- as investors position for an inevitable nuclear industry resurgence.

You see, not only is Japan expected to restart the vast majority of their nuclear fleet, but other countries around the world are counting on nuclear utilities to supply their burgeoning electricity needs.

It should come as no surprise that this looming nuclear industry resurgence will have a remarkable effect on global uranium demand.  I expect demand, as well as the price of the commodity, to work its way higher as time progresses.

As usual, I’ll give you additional details on our trade thesis in our upcoming monthly update.

For now, just focus on entering our newest trade at a fair price…

Cameco Corporation $CCJ is a mid-cap uranium producer with mining operations in the US, Canada, and Kazakhstan.  What’s more, the $5.6 billion market-cap company is also a leading uranium refiner.

Since $CCJ has a hand in various aspects of the uranium fuel cycle, it’s the perfect candidate for a strong rally to higher prices as the nuclear industry recovers from Fukushima.

Here are some additional details on our purchase…

Technically Speaking:

As you can see, $CCJ fell to a new yearly low at $13.00 in July.  However, as investors hear of the Sendai nuclear restart, they’re pushing shares of the miner/refiner back to higher prices.

We expect this short bout of bullishness to turn into something much more as investors start betting on a full-scale nuclear revival!

 

WHAT TO DO NOW: 

Cameco Corporation $CCJ is trading at $14.31

Buy $CCJ up to $14.60 per share 

Our profit target is $22.00 or more

Risk Control Price is $12.17 (or a 15% stop loss from your entry point)

*** Editor’s Note***  In rare circumstances, I allow for a 15% stop loss instead of the usual 10%.  Quite simply, a 10% risk control price allows for very little margin of error in low priced stocks like $CCJ that are still in a downtrend.  With a 15% stop, $CCJ will have the wiggle room it needs to put in a long-term bottom.

 

Category: Commodity Trading