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Uranium's Stealth Upward Trend

Mar. 06, 2019 6:09 AM ETCCJ, URA, CCO:CA8 Comments
Steven Saville profile picture
Steven Saville


  • It's likely that by the middle of the next decade, most new cars, trucks and buses will be Electric Vehicles.
  • Being bearish on uranium has become easy, but bull markets begin when it's easy to be bearish.
  • Nowadays, owning the shares of Cameco (CCJ) is the surest way of participating in a uranium-mining rally.

Editor's note: Originally published at tsi-blog.com on March 4, 2019.

It's likely that by the middle of the next decade, most new cars, trucks and buses will be Electric Vehicles (EVs). As a consequence, it's a good bet that over the next several years the demand for both gasoline and diesel will shrink dramatically while the demand for electricity (to recharge EV batteries) experiences huge growth. Part of this demand growth will be satisfied by nuclear power, which is why uranium is an indirect play on the EV trend.

The uranium price might have begun to discount the aforementioned shift in demand in that it has been quietly trending upward since around April of last year (a weekly chart is displayed below). I say "quietly" because the rally has been accompanied by very little in the way of speculative enthusiasm. On the contrary, the rally that began last April has been accompanied by widespread scepticism.

This is an important sentiment change. Whereas every multi-month up-move in the uranium price prior to last year was greeted as if it heralded the beginning of a bull market, almost everyone has dismissed the most recent rally as just another counter-trend bounce. Being bearish on uranium has become easy, but bull markets begin when it's easy to be bearish.

I'm not convinced that a uranium bull market is underway, but I do think that for the uranium-mining sector the intermediate-term risk/reward is skewed decisively towards reward. The reason is that the mining stocks could achieve large price gains with or without a genuine bull market in the underlying commodity. All it would take, I think, is a move by the uranium price into the $30s to convince many speculators that a major trend reversal had occurred and prompt aggressive buying of uranium-mining equities.


This article was written by

Steven Saville profile picture
I graduated from the University of Western Australia in 1984 with a degree in electronic engineering and from 1984 until 1998 worked in the commercial construction industry as an engineer, a project manager and an operations manager. I began investing in the stock market 2 months prior to the 1987 stock market crash and thus quickly learned about the downside potential of stocks. Only slightly daunted by the rather inauspicious timing of my entry into the world of financial market investments, my interest in the stock market grew steadily over the years. In 1993, after studying the history of money, the nature of our present-day fiat monetary system and the role of banks in the creation of money, I developed an interest in gold. Another very important lesson soon followed: gold may be the ideal form of money for those who believe in free markets and a wonderful hedge against the inherent instability of the government-imposed paper currencies, but it is not always a good investment. By mid-1998 the time and money involved in my financial market research/investments had grown to the point where I was forced to make a decision: scale back on my involvement in the financial world or give up my day job. The decision was actually quite an easy one to make and so, at the beginning of 1999, I began investing/trading on a full-time basis. My major concern in deciding to pursue a career in which I devoted all of my time to my own investments was that I would miss the personal interaction that had been part and parcel of my business management career. The Speculative Investor (TSI) web site was launched in August of 1999 as a means for me to interact with the world by making my analysis/ideas available on the Internet and inviting feedback from others with similar interests. During its first 14 months of operation the TSI web site was free of charge, but due to the site's growing popularity I changed it to a subscription-based service in October of 2000. Its popularity continued to grow, although I remained -- and remain to this day -- a professional speculator who happens to write a newsletter as opposed to someone whose overriding focus is selling newsletter subscriptions. My approach is 'top down'; specifically, I first ascertain overall market trends and then use a combination of fundamental and technical analysis to find individual stocks that stand to benefit from these broad trends. This approach is based on my experience that it's an order of magnitude easier to pick a winning stock from within a market or market sector that's immersed in a long-term bullish trend than to do so against the backdrop of a bearish overall market trend. Fortunately, there's always a bull market somewhere. I've lived in Asia (Hong Kong, China and Malaysia) since 1995 and currently reside in Malaysian Borneo.

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Comments (8)

EagleFirst profile picture
I believe Bill Gates' vision:

Nuclear has reach a plateau in the west.....only real ghrowth would be in China and India...and they will buy all nuclear fuel from their JV in Kashahjistan....as simple as that...don"t be fooled....a bias article,Saludos.
ClayMontgomery profile picture
It is an interesting point the author makes about Cameco shares are now a better way to get exposure to uranium price action than the URA. I prefer Energy Fuels, but I'm holding Cameco at least through April, as I expect any announcement on the 232 petition will likely be positive for Cameco too.
alacer profile picture
CCJ is priced over 10% higher since John Mauldin recommended it on 20180802 on the basis of upside potential of 200%-400% in a few years. But it's IBD consensus rating has decreased from 63 to 53 since 20190214 (16 trading days ago) yet it is still 6th in the Mining-Metal Ores Group and Zacks still ranks it as a 3-hold with a value-growth-momentum-composite profile of D-C-F-F.

Last two earnings show a strengthening EPS uptrend approaching the FQ4 2017 high on 20180209.

It has no New Constructs profile, but passes the thinkorswim phase 1 funadamentals screen while failing the phase 2 sentiment screen.

Finviz shows its consensus analysts recommendation is 2.4 (1-buy and 5=sell) and its price target is below its current price at $10.86

SimplyWall.St. estimates based on consensus of 10 analysts:
DCF fair value: $17.85 (51% undervalued)
Earnings growth/Y over next 1-3Y 24.6%
Revenue growth/Y over next 1-3Y 0.4%
ROE total over next 3Y 6.9%
Dividend 0.52%

CCJ's chart shows:
Long term downtrend since 20Y high at $56 on 20070611
CCJ has been updrending on a yearly chart (over a 29% gain)
Decreasing 50D avg vol since 20170304
Price resting just below 100DMA on 1Y chart
CMF below zero and decreasing from yearly high since 20190205
TrueStrenghtIndex below zero and decreasing from a high since 20181009
RelativeStrength(SPX) decreasing from yearly high since 20190116 but turning up since 20190301

Based on this data CCJ looks like a hold to me at this time. A a growth stock I would consider buying it if it breaks above its 100DMA and 50DMA preferably on high volume and increasing CMF preferably above zero. As a value stock I would also consider buying it when it dips below its 200DMA again.


The smaller uranium miners with a domestic US presence will do well if there is a positive 232 ruling next month. Otherwise I'm not going to bet on an EV transformation.
I think the section 232 report goes to Trump on or about April 14-18 and he has 3 months to act on it. Jeff Klenda, CEO of URG, speculated that if section 232 is not approved that the spot price of uranium could jump to $40.00 or higher overnight as Utilities pent up demand could burst forth. They have been holding off on purchases and entering long term contracts for well over a year pending a section 232 resolution.
matt.wood profile picture
Less stealth more wealth please! How is that petition doing President Trump?
Amouna profile picture
I also like Denison Mines among smaller explorers and hopefully near term producers, but completely agree that, for someone not willing to take much risk and wanting to stick to producers only, Cameco or Kazatomprom are pretty much the only two names to bank on
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