Cameco (CCJ) to Benefit from Obama Nuclear Initiative? - Barron's
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With the Obama administration seeking to embrace nuclear energy, a question is raised of who will benefit the most form the new expenditure of sweet, government capital. That answer may very well be Cameco (NYSE: CCJ)
Barron's did a nice piece highlighting the company, a Canadian miner of uranium that is also one of the world's largest sellers of the substance.
Obama, on February 16, 2010, announced that he is looking for a "new generation" of nuclear power, and committed $8.3 billion to the building of two nuclear plants in Georgia. He's looking to triple loan guarantees in his 2011 budget, from $18.5 billion to $54.5 billion.
Barron's says that Cameco has always led the market by posting better than expected gains, and shares have risen 88.5% through 2009. The stock is currently trading 11.9% lower to $28.75 YTD.
One analyst, from Saloman Partners, believes that the stock could gain as much as 40% in the next year. He believes that the company is one of the purest plays on uranium that you can get. The analyst notes that last year was an off-year for the management at Cameco, where everything they touched seemed to turn to dust [Midas touch reference]. The analyst is also a bear on uranium prices as a whole when semi-annual buying begins in April.
Another factor is the program between the U.S. and Russia, called Megatons to Megawatts, which recycles old warheads into usable material for the nuclear power industry. This program may be fizzling out, though, opening up doors for producers.
The U.S. has only 11 nuclear plants, and has plans to double that number by 2020, and triple it by 2025.
Cameco has good footholds in rich mines, but the company also is vertically integrated and benefits from owning shares in nuclear generators, processing plants, and fabrication plants. The company also buys and resells uranium on the open market.
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Cameco also recently announced that they have pumped out their Cigar Lake mine, which flooded in 2006 and again in 2008. The mine is expected to produce about 10% of global mined uranium when it opens.
Risks to revenues may include falling uranium prices, an aging, ready-for-retirement CEO, and delays at the company's mines.
Barron's did a nice piece highlighting the company, a Canadian miner of uranium that is also one of the world's largest sellers of the substance.
Obama, on February 16, 2010, announced that he is looking for a "new generation" of nuclear power, and committed $8.3 billion to the building of two nuclear plants in Georgia. He's looking to triple loan guarantees in his 2011 budget, from $18.5 billion to $54.5 billion.
Barron's says that Cameco has always led the market by posting better than expected gains, and shares have risen 88.5% through 2009. The stock is currently trading 11.9% lower to $28.75 YTD.
One analyst, from Saloman Partners, believes that the stock could gain as much as 40% in the next year. He believes that the company is one of the purest plays on uranium that you can get. The analyst notes that last year was an off-year for the management at Cameco, where everything they touched seemed to turn to dust [Midas touch reference]. The analyst is also a bear on uranium prices as a whole when semi-annual buying begins in April.
Another factor is the program between the U.S. and Russia, called Megatons to Megawatts, which recycles old warheads into usable material for the nuclear power industry. This program may be fizzling out, though, opening up doors for producers.
The U.S. has only 11 nuclear plants, and has plans to double that number by 2020, and triple it by 2025.
Cameco has good footholds in rich mines, but the company also is vertically integrated and benefits from owning shares in nuclear generators, processing plants, and fabrication plants. The company also buys and resells uranium on the open market.
.
Cameco also recently announced that they have pumped out their Cigar Lake mine, which flooded in 2006 and again in 2008. The mine is expected to produce about 10% of global mined uranium when it opens.
Risks to revenues may include falling uranium prices, an aging, ready-for-retirement CEO, and delays at the company's mines.
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