Q: Cameco, Denison, and Mega Uranium are really ripping today on good volume. The charts look good in my view, these names have moved up steadily for quite a while now. News now out that the worlds largest producer Kazatomprom has a large shortfall in supply. I just took a meaningful position in Denison Mines. I vividly recall the uranium mania that took hold in 2007 prior to fukishama and the parabolic movements that took place in the stock charts with respect to uranium.
What do you believe are the similarities/differences re: events that shaped the frenzy in 2007 versus the excitement today about these names. Could these names have similar parabolic moves in your opinion ?
What do you believe are the similarities/differences re: events that shaped the frenzy in 2007 versus the excitement today about these names. Could these names have similar parabolic moves in your opinion ?
5i Research Answer:
While we think the sector outlook remains strong, 2007 was different, in the fact that there was huge investment demand for uranium and U stocks, in addition to industry demand. Yes, this could happen again, but in 2007 every commodity was running and there were multiple takeovers globally. Investment funds were in a bubble trying to deploy capital. Momentum has a way of feeding upon itself, and we would not rule out a repeat, but so far the move seems far more disciplined to us than it did back then.