Uranium Stocks Soar To 6 Year Highs On Blowout Cameco Earnings, Hugh Hendry Reco

The recent surge in Uranium stocks continued this morning after Cameco smashed Q4 estimates and provided a positive sector outlook.

Cameco, which last week jumped on what a TD Securities analyst said was a residual Reddit short squeeze, reported 4Q adjusted EPS C$0.12, smashing the estimated loss/share of C$0.02.More importantly, the company - which is the operator of the largest uranium-producing mine in the world, Cigar Lake in Saskatchewan - said that heading into 2021, it remains positive about the long-term fundamentals for the uranium market, citing a focus on electrification globally and Biden administration support for nuclear power. It added that demand for nuclear power is growing for traditional and non-traditional uses.

“These are the fundamentals that give us growing confidence the uranium market will undergo a transition similar to the conversion and enrichment markets,” CEO Tim Gitzel said.

On the other hand, Cameco said that it is Cigar Lake production remains suspended due to the Covid-19 pandemic, resulting in an uncertain production plan for 2021, and expects to incur C$8 million to C$10 million per month in care and maintenance costs. Paradoxically, this remains positive for the industry as it means there is far less supply which in turn is pushing prices higher, and lifting stocks.

The strong earnings followed a note from Bank of America published in early February according to which nuclear reactor closures in 2021-2030 could be delayed to beyond 2030, which would lead to "an additional 26Mlbs of global uranium (U3O8) demand over that period."

The uranium sector was further buoyed by a tweetstorm from iconic investor Hugh Hendry, who on Sunday tweeted "A lot of you are invested in uranium. I commend you. I wish I was. Uranium is the rockstar of commodities. It doesn't mess around - bull and bear markets are of epic proportions."

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Monica Kingsley 2 weeks ago Contributor's comment

Good focus on uranium, I did so as well today. Keep up the good work throughout!