I have been bullish on uranium since 2017, which means I have seen two rallies, neither of which I traded.
At the start of the year, I came up with the concept of the "Electrification Trilogy," calling for increases in demand for new sources of electricity (nuclear/uranium), transmission infrastructure (wiring/copper), and electrical storage (batteries/lithium) and while I maintained exposure to copper and lithium, I really only had a small position in one uranium developer forgetting all the while that the best proxy for uranium has to be Cameco Corp. (CCO:TSX; CCJ:NYSE).
While I find it difficult to own any stock after it has nearly doubled, I listened to the conference call this week after they reported blow-out earnings, and what grabbed me by the throat was the forward guidance in which they said: "We are seeing durable, full-cycle demand growth across the nuclear energy industry."
That is really positive guidance, and with 57 new reactors currently under construction around the globe and with Germany reversing their decision to dismantle three of their power plants, the demand for uranium is going to kick in long before new supply can hit the market.
Accordingly, I decided to bite the bullet and take a punt on a few Cameco March US$40 calls in the US$5.00 range on the assumption that I will see all-time highs above US$46.41 by New Year's Day and US$50 in Q1/2024.
I know I am late to the party, but with guidance so powerfully bullish and nuclear the only real solution to the global energy problem, I cannot see getting hurt despite the modest overbought conditions it moved into on Friday before backing off.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Cameco Corp.
- Michael Ballanger: I, or members of my immediate household or family, own securities of: Cameco Corp. My company has a financial relationship with: Cameco Corp. I determined which companies would be included in this article based on my research and understanding of the sector.
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