Company: Cameco Corp
(NYSE:CCJ)
Market Cap: $18.8 billion
Shares Outstanding: 353 million
Buy Below: $59 per share
The Company
Cameco is the world’s largest uranium producer. It is publicly traded on the
Toronto and New York stock exchanges. The Company’s competitive position is
based upon its large, high-grade reserves and low-cost operations, significant
market position and access to other supplies of uranium and uranium conversion
services. Cameco is also one of the four significant converters of uranium
concentrates (“U3O8”) to uranium hexafluoride (“UF6”) in the western world, the
only commercial supplier of services to convert uranium concentrates to uranium
dioxide (“UO2”) in the western world, and one of two Canadian commercial
suppliers of fuel fabrication services for CANDU reactors. Cameco subsidiaries
have a 31.6% limited partnership interest in Bruce Power that leases and
operates four Bruce B reactors. The Company continues to explore for uranium in
a number of countries.
While Cameco continues its principal focus on the nuclear business, it also owns
52.7% of Centerra, the largest western-based gold producer in Central Asia and
the former Soviet Union, which is publicly traded on the Toronto Stock Exchange.
Centerra operates two producing gold mines, the Kumtor mine in the Kyrgyz
Republic, in which it has a 100% interest, and the Boroo mine in Mongolia, in
which it has a 95% interest.
2007 Expected Material Developments
Cameco expects to occur in 2007, or that have occurred prior to this date,
include the following:
• In March 2007, Cameco provided an update on the Cigar Lake project including:
(i) production start up is targeted for 2010, subject to regulatory approval and
timely remediation; (ii) Cameco’s share of capital costs, including mill
modifications, to bring Cigar Lake into production is estimated at $508 million
including $234 million spent on construction as of March 2007, leaving $274
million remaining; and (iii) Cameco’s share of flood remediation expenses is
estimated at $46 million.
• Cameco will be negotiating new collective agreements for unionized employees
at Zircatec and Port Hope, as their agreements expire in June 2007 (Source:
Company SEC 40-F filing).
Why I like it
As economies throughout the world continue to grow, so does the competition
for the world’s limited supply of energy. The move towards a “green” economy
makes alternative fuel supplies very attractive and nuclear power is driving the
uranium stocks in very profitable trends. At the head of this list is CCJ which
is the world’s largest uranium producer. This company is uniquely positioned to
reward investors well in this environment. Total revenues have doubled over the
last two years. Net income has grown 35% in the last year. Technically the stock
looks very strong.
Projection
According to my numbers, this is a stock that should be selling in the $100
range over the next three to five years. It is currently trading in the $50
range, so CJJ has a large upside potential. Place a sell stop at 25 percent
below your entry price. As the stock rises, continue to raise your stop so that
you are trailing the Friday close by 25 percent.
Contact Information
Cameco Corp.
2121-11th Street West
Saskatoon, SK S7M 1J3
Phone: 306-956-6200
www.cameco.com
