Finally Some Love
Tuesday, December 05, 2006
Imagine my surprise when I opened this morning's Wall
Street Journal to see on the front page a lead in mentioning uranium (which gave
off a bearish chill down my spine) only to find that once I read the article it
was absolutely bullish (sometimes you must read between the lines and use the
head on your shoulders)!!!!!! Although the only miner mentioned was Cameco with
USEC's refining capabilities also mentioned and then PG&E being mentioned as a
consumer of this material, the main point was that a true uranium shortage does
exist! Not only that, but odds are that it will only get worse before it gets
The financial news media writes about intriguing topics
which include industries and stocks, however most of the time they wait for
their very own readers (in this case the readers of The Wall Street Journal who
happen to be investors) to discover the stocks that they then profile.
Case-in-point is Cameco, great industry with great assets (although some may be
in better condition than others), but the main point is that many people have
already discovered this company (market cap is about $15 billion mind you). They
are on the right track with uranium, but they focused on the wrong people (the
utilities). Anyone who is a true investor would be able to read through this
supply/demand problem and know right at that moment that they needed to begin
researching those who actually mine the “yellowcake”.
As I turned on the television this morning at about 11 AM,
in hopes of watching and hearing something from the Wall Street Journal writers
on CNBC, I was amazed to find a Citigroup analyst touting nuclear power. WOW!
Two in one day, however once again I was disappointed because he recommended,
GET THIS, ALL UTILITY STOCKS! Now I have no research to back this up, but I
truly cannot think of one industry where they GREW profits as their main input
for their business model increased dramatically in value. Yes those companies
could lower costs if they build one of the first six new nuclear plants to
replace older, polluting coal plants, but the main point is that each year their
input will rise in price for the foreseeable future.
This is most certainly the tip of the iceberg in terms of
media disclosure. Something exciting will happen where the spotlight will be
forced upon this industry and then all will know where at least part of the
market's speculative money has been flowing the past couple of years. We stick
by our prediction that SXR, URE, and FSY will be the next companies to have
their stocks increase dramatically due to fund investing (mutual, index, hedge
or other) followed by the general public. We also like those other junior picks
where we believe our money has the potential to double within a year. We will
continue to watch as the media picks up on this evolving investing idea, and our
bet is that the “talking heads” will fall in love and begin to run with it.
After all, excitement sells papers and increases ratings.