As an investor who doesn't mind a conservative income-driven play every once in a while, I've decided to shift my focus to the industrial metals & mining sector and highlight several of the reasons behind my decision to remain bullish on shares of Cameco Corp. (CCJ).
#1: Recent Performance & Trend Behavior
On Monday, shares of CCJ, which currently possess a market cap of $8.34 billion, a forward P/E ratio of 20.95, and a dividend yield of 1.85% (CDN $0.40), settled at a price of $21.10/share. Based on their closing price of $21.10/share, shares of CCJ are trading 4.09% above their 20-day simple moving average, 10.13% above their 50-day simple moving average, and 6.13% above their 200-day simple moving average. These numbers indicate a short-term, mid-term, and long-term uptrend for the stock which generally translates into a moderate buying mode for both near-term traders and longer-term investors.
#2: 36-Month Dividend Behavior
Since December 29, 2010, the company has increased its quarterly distribution once in the last three years, with the most recent increase having taken place in May of 2011. The company's forward yield of 1.85% (CDN $0.40) coupled with its ability to maintain its quarterly distribution over last three years, make this particular metals & mining play a highly considerable option, especially for those who may be in the market for a conservative stream of quarterly income.
#3: Comparable Dividend Growth
Not only does the partnership's 1.85% dividend yield and 36-month dividend behavior make this particular stock a highly attractive option for most income-driven investors, its dividend growth over the last three years versus one of its sector-based peers is also something investors should almost certainly consider. From a comparable standpoint, CCJ's dividend has grown a solid 38% over the past three years, whereas the dividend growth of its Canadian-based peer MFC industrial (MIL) has only increased 20% over the same period.
#4: Recent Update at its Cigar Lake Uranium Project
On Monday, December 16, Cameco announced that jet boring had been underway at its Cigar Lake uranium project in Saskatchewan, and the site is on track to begin ore production by Q1 2014. Investors should note that Cigar Lake, which originally was scheduled to begin production this year, has suffered various delays due to flooding and a series of technical challenges. As long as there aren't any subsequent weather-related or technological issues, I see no reason why production wouldn't begin by Q1 2014.
Risk Factors (Most Recent 40-F)
According to the company's most recent 40-F there are a number of risk factors investors should consider before establishing a position Cameco Corp. These risk factors include but are not limited to:
#1 - The company's actual sales volumes or realized prices for any of its products or services could be lower than what it expects, and for any reason, including changes in market prices or loss of market share to a competitor, results could be negatively impacted.
#2 - Certain production costs may be higher than the company had planned, or in some cases where the necessary supplies are not available, developmental and exploratory, as well as fully operable mining projects could be negatively impacted.
#3 - If, for any reason, the company's mineral reserve and resource estimates are not as reliable as had been estimated, results from operations could see a significant decline.
For those of you who may be considering a position in Cameco Corp. I'd keep a watchful eye on a number of things over the next 12-24 months as each could play a role in both the company's near-term and long-term growth. For example, near-term investors should focus on the recent performance and trend behavior of the company while longer-term investors should focus on the company's dividend growth over the next 12-24 months as well as any further developments that may occur with regard to its Cigar Lake uranium project.