Although there has been some strength in the mining sector lately, the overall trend for the space hasn't been good. The industry has been hampered by low levels of demand, concerns about emerging markets, and a strong dollar, which has pushed many investors out of commodities.
While this bearish outlook has manifested itself in silver and gold miners, a number of other segments have also been hit by this trend. In particular, the miscellaneous segment -- which includes firms that mine for items like uranium, rare earths, and palladium/platinum -- could also face weakness ahead, such as in the case of Cameco (CCJ).
Cameco in Focus
The Canadian-based firm is a relatively well-known name in the uranium mining space, operating several properties in the Saskatchewan province of Canada. The company also has a few locations in the U.S. Midwest, in addition to a Kazakhstani property. Beyond their mining segment, the company is also engaged in a bit of nuclear energy production. This is represented by a minority stake the company has in Bruce Power L.P., which produces power in a few Ontario reactors.
Thanks to its relatively diverse operations and the company's focus on a key product like uranium, CCJ hasn't seen that bad of a 2013 so far. In fact, the company is positive from a year-to-date look, adding about 5% in that time frame -- although it has experienced extreme volatility as well. While this definitely represents a bit of outperformance when compared to others in the space, investors should be concerned that this will not last in the months ahead. This is particularly true when investors consider the estimate revision picture, as well as projected growth rates for this company.
While CCJ analysts are expecting solid growth for both the current quarter and next quarter periods, this isn't expected to translate to the full-year time frame. For this time period, analysts are looking for an earnings contraction of about 15% year over year, well below the struggling industry and its average.
Furthermore, investors should note that the consensus has fallen like a stone for the full year time frame, with estimates going from $1.23/share 90 days ago to their current level just below $1.00/share. Plus, it isn't like CCJ has a great track record when it comes to earnings dates, as the over the last four quarters the company has seen an average surprise of -23.17%.
Thanks to these factors, CCJ has earned itself a Zacks Rank No. 5 (Strong Sell), suggesting that it is due to fall back to Earth and underperform peers in the months ahead. The stock also has an underperform Zacks Recommendation, which means that the longer-term outlook isn't any better for this firm.
If investors really want to stay in the miscellaneous segment of the mining industry, there are only a handful of choices. The space currently has one of the lowest Zacks Industry Ranks, so top-ranked stocks are few and far between. Still, there are a handful of No. 1 Ranked stocks that could be worth investing in, including Avalon Rare Metals (AVL), Impala Platinum (IMPUY.PK), and Stillwater Mining (SWC). All of these have seen their Ranks surge to the top echelon in the past week, and thus they may be better picks than CCJ for the months ahead.
Avalon Rare Metals: Free Stock Analysis Report (email registration required)
Cameco: Free Stock Analysis Report (email registration required)
Impala Platinum: Get Free Report (email registration required)
Stillwater Mining: Free Stock Analysis Report (email registration required)