Cameco Corporation (NYSE:CCJ) is one of the world's largest uranium miners, alone accounting for roughly 16 percent of world production. The company has major mines in Canada and the US with projects in Australia and Africa.
The uranium giant is currently $7.54B in market cap and as the chart bellow illustrates, the stock has been oscillating in a range of roughly between the $18.30 and $22.80 levels for the past six months. As the strength and sentiment indicators show, the stock is performing poorly and underperforming the broad market. After falling to oversold territory in late September, the stock failed to attract enough attention to send it roaring back towards the high end of its range. Instead it created a lower high and a lower low - a continuation of a bearish trend.
Investors might be tempted to trade this stock, relying on support to hold, however caution should be taken. The weakness in Cameco is not surprising given the weakness in uranium prices. As the price chart shows, the weekly spot price for yellow cake closed at $45.75/lb, below the 2011 low instigated by the Fukushima disaster.
The three year chart shows that if the $18.30 level does not hold, the stock could easily test the 2011 low of roughly $16.30. This could be a realistic scenario given uranium prices breached the 2011 low and Cameco managed to remain well above its 2011 low for the time being.
More details and outlook on the price of the commodity will be available on October 31 when Cameco reports its Q3 results (Conference call will be on November 1). Until then, investors should remain cautious and not take the bearish trend in uranium prices lightly.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.