Wednesday, March 21, 2007
Misc Thoughts (EPLN, ETLT, YHGG, LVWD, NICK, uranium)
Old stuff: EPLN dropped to 70 cents and volume dried up. Nothing from ETLT although the only interesting outcome would be if it turned out to be fraudulent. Otherwise, there's nothing of interest since I would've sold the stock regardless and I'm willing to admit that it's more than likely just fine. I see that YaSheng Group (YHGG financials) has dropped. Their 10-K showed 41 cents earnings, but it was mostly gobbled up by their continuous large capex. My guess is that in reality, they're probably breaking even or possibly worse. That was a cigar butt stock, but it sure does seem cheap with an apparent P/E of less than 4. LiveWorld (LVWD collected entries) is still stuck at 50 cents. And NICK (sec) is doing fine: after the subprime panic clears up, they'll look very good, in my opinion.
Cameco now says Cigar Lake is delayed by another year. And the market pushed the stock price up fairly substantially after that. This would make it seem that the market was expecting worse, which would also explain why the juniors' stock prices took a beating at the same time. Another explanation is that there is simply a fixed amount of dollars chasing uranium stocks right now and Cameco's announcement simply shifted money around: Investors hate uncertainty and the market probably sees this as Cameco removing some uncertainty... although I believe Cameco didn't reveal much more than was already known.
UPDATE same day:
I updated the post on the BakBone firings. Nothing new.
UPDATE Mar 24, 2007:
Here's another uranium article. It's interesting that the two biggest risks they see are the same ones I came up with independently.
One is the risk that another disaster, such as Three Mile Island or Chernobyl, could cause sentiment to change again, away from nuclear energy. This is definitely a consideration, particularly as nuclear energy spreads to countries which may not have stringent health and safety standards.The first risk is minimized by the fact that lots of countries are pursuing nuclear power, many of them are not as easily influenced by the latest fad panic (China, India, Russia, various small countries). The second risk only delays the impact of the imbalance, rather than remove it. I suppose the worst case would be a big stockpile dumping right as your favorite uranium company is ramping up production. But the imbalance is so huge and demand will be growing so much that I just don't see taking a loss because of this.
The other risk, albeit a left-field one, is that a strategic stockpile of a few million pounds could hit the market. The U.S., for example, still holds a strategic stockpile. But it is called strategic because it is precisely that. It seems unlikely that this would be sold just to provide a temporary solution to electricity production.