MTP Trade #9 2019
Buy Cameco (CCJ:xnys) @ 11.92
Target: test of 13.00 level and if breaks, look for it to trade higher.
Stop: for low risk investors should be the 11.20 level and for those with higher risk tolerance the stop should be at 10.75.
Product type: Stock or Stock CFD
This trade may not be for everyone and it is a longer term trade than many of the ones we suggest here at Minter!
(Please be aware that while we believe this investment idea to have merit, there is high uncertainty regarding the future of nuclear power and the future of uranium as an energy source is a very controversial topic.)
Green investments have been in focus for some years now. There is a whole sub industry of the financial services which is dedicated to fighting global warming.
Green Bonds, Green infrastructure investments, Green related investment products…..
I wont dwell too much on this phenomena as I am sure all of our clients have read or been offered such investment opportunities.
Wind, Solar and hydro are all the key buzz words, while coal is the odd man out.
Two things are coming together as we see it:
2020 election where there will be a great deal of focus on the environment with the potential democratic candidates all trying to grab this key issue as their own.
According to polls, the environment is a key issue for young voters and is perceived as a winner compared to the current administration.
We will read and hear about the democrats plans such as Green New Deal in the months ahead and into the election in November 2020!
The U.S. total energy consumption and production has changed over time:
While U.S. production is seeing more natural gas and renewables.
According to research I have read currently, solar and wind make up around 17% of Americas electricity needs.
In order to speed up the process, something dramatic will need to take place. In order for this to occur we think that nuclear energy will play a role.
Nuclear energy is clean, proven and although quite controversial, has a strong track record in the U.S.
After the terrible accident in 2011, at Fukushima, Japan caused by the most powerful earthquake in Japan’s history, caused a reactor to shut down.
The ensuing meltdown caused a great deal of damage while killing and injuring many people.
Japan shut down all but two of its reactors, and other countries did the same. Germany is phasing out nuclear completely and many countries put new capacity plans on hold.
Uranium demand dropped and the price fell 70%. The Uranium industry collapsed. With such low demand and low prices many companies in the sector were forced to close as they were unable to mine and sell with a profit.
We think with better safety control and a strong desire to reduce the use of fossil fuels, nuclear will gain. Uranium prices will bounce and Cameco (CCJ) has a chance to rally significantly over the next 2 to three years.
Cameco is one the world’s largest providers of the uranium fuel needed to generate clean, reliable baseload electricity around the globe.
From Cameco Website: https://www.cameco.com/
*Cameco produces close to 15% of the world’s uranium. The quality of the uranium is much higher than the global average.
*Cameco’s price per pound to produce is close to 50% of its peers.
*There are 50 nuclear reactor under construction globally, with some closing of old reactors as well. China has 7 new reactors in 2018. Japan has 9 reactors now operating, and 18 more in process of upstart.
*Main operations for production are in Canada and Kazakhstan.
*Cameco trades on the New York Stock Exchange *NYSE:CCJ) and the Toronto Stock Exchange (TSX:CCO)
Top uranium producing companies in 2017:
- Cameco 23.8 million pounds
- Rio Tinto 6.7 million pounds
- BHP 4.94 million pounds
- Paladin Energy 4.149 million pounds
- Energy Resources of Australia 1.598 million pounds
In addition there are a couple of unlisted companies that are large producers: Kazatomprom and Uranium One
Source Uranium Invest News: https://investingnews.com/daily/resource-investing/energy-investing/uranium-investing/uranium-producing-companies-bhp-rio-tinto-cameco-areva-paladin-ur-energy-uranium-one-energy-fuels-peninsula-uranium-resources/