Nick Hodge Finds "Underground" Profits in Gold and Uranium

08/17/2018 5:00 am EST

Focus: COMMODITIES

Nick Hodge

Founder and President, Outsider Club

Nick Hodge is a leading expert in the resource sector, focusing on junior and small cap commodity plays. The editor of Wall Street's Underground Profits has just reiterated his buy ratings for two stocks in the out of favor gold and uranium sectors.

Stocks are getting whacked across the board. And in our portfolio specifically, there are two positions that have been above their buy under prices and have now fallen below. You should take advantage of that to own them if you don’t already.

The first one is Teranga Gold (Toronto: TGZ; OTC: TGCDF). The company has done nothing but execute. It has one low-cost gold mine, is building another, and has an exciting exploration project as well.

Teranga Gold is a quickly growing African gold producer. Its Sabodala mine in Senegal just delivered record quarterly production of 65,381 ounces. It set a six-month record as well with 129,412 ounces produced. And it raised annual guidance to at least 230,000 ounces produced.

Costs are also falling and were US$867/oz all in over the first half of the year. Quarterly profit increased to US$11.586 million from US$9.6 million the quarter before.

Its second mine, called Wahgnion in Burkina Faso, is under construction right now and is on schedule for first gold pour before the end of next year.  And it continues to deliver high-grade drill results from Golden Hill, also in Burkina Faso.

Everything headed in the right direction, except the share price. It ran to nearly C$5.00 earlier this year but has now been caught up in broader gold softness. The stock has fallen below our buy under price of C$3.75 today. Own it.

Meanwhile, our second buy recommendation is Uranium Energy Corp. (UEC). I’ve beaten the uranium drum pretty hard, and things are finally starting to move.

I have recommended buying UEC if it fell back below US$1.63. That has now happened as well. Take advantage of that to initiate or add to positions. It’s one of only two U.S. junior uranium producers that could ramp up to help supply U.S. uranium demand.

With the recent news that Cameco (CCJ) is not going to restart idled capacity and the U.S. government is examining the impact of uranium imports on national security, we believe the uranium spot price is poised to increase significantly. As a result, we have increased our price target for UEC from $3.00 to $3.40 and we are reiterating our buy rating.

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