A Uranium Trio
03/17/2006 12:00 am EST
Mark Leibovit is best known as a technician, with a system based on price reversals and rises in volume. Here, however, he also looks at fundamentals; following a trip to China, he sees an increase in nuclear power abroad and, in turn, an opportunity for uranium stocks.
"Having just returned from China and learning that the possibility exists for the construction of dozens if not hundreds of new nuclear plants, uranium is certainly a long-term place to be putting some money. Although no new nuclear plants are scheduled to be built in the US, foreign nations are scrambling to build them. We can only assume that 'big oil' and 'big energy' interests have tightened the knot on their control, insuring further pollution, higher energy prices, and continued foreign dependence on fossil fuels. What will it take to wrestle that control away from them?
"USEC (USU NYSE) supplies low enriched uranium (LEU) for commercial nuclear power plants worldwide. The company also performs contract work for Department of Energy. In addition, USEC provides nuclear energy solutions and services, including design, fabrication, and implementation of spent nuclear fuel technologies; nuclear materials transportation; and nuclear fuel cycle consulting services, such as planning, market research and analysis, price forecasts, procurement strategies, and other services. Technically, the stock formed a bullish key reversal day after a sharp decline. This is a solid uranium play. Buy for a target of 18. Downside risk is to 9."
"US Energy Corp. (USEG NASDAQ) engages in the development and production of mineral resources. The company owns interests in properties prospective for gold, uranium, vanadium, and molybdenum located primarily in central Wyoming. It also engages in commercial real estate activities. Technically, the stock formed a positive volume reversal pattern in mid-February and we are looking for higher prices from here. USEG should move higher from here. Downside risk is to 3.50.
"Valhi (VHI NYSE) is a play on uranium and titanium. It operates in the chemicals, component products, waste management, and titanium metals industries. It owns and operates a facility in west Texas for the processing, treatment, storage, and disposal of hazardous, toxic, and certain types of low-level radioactive wastes. Technically, the stock has been consolidating around 17 for several months and should trade back toward 22 in coming months at which time we'll re-evaluate the potential. Optimal buy is the 13 area, but we're not betting it will work that low."