Uranium could be a monster in 2014
Jan. 17, 2014, 3:26 p.m. EST
By J.C. Parets
There are a lot of investors out there that still have a sour taste in their mouth when it comes to uranium stocks. The last time these guys were getting any attention was back in the second half of 2010 when they all had huge rallies. This continued into early 2011, but ended badly with the Tsunami in Japan that caused a nuclear meltdown at a Fukushima power plant. However, investors’ fears after the accident may be waning.
A disaster like Fukushima often becomes the old, "kid touching the hot stove" sort of mentality. And sure enough, we haven't heard much out the uranium space ever since. I personally think this is bullish for these stocks. The less that the media and mainstream investors are involved, the more I like them. When you see uranium stocks making the headlines and everyone's talking about them, that's when we'll probably be selling.
Let's start with the granddaddy of them all: Cameco. This is what we call the ExxonMobil of uranium stocks. Not that it is anywhere near the size of America's largest company, but relatively speaking, Cameco is so much bigger than the others, that in the uranium world, it is the benchmark.
What stands out to me is the huge two-year base that this stock has put in since 2011. After such a devastating collapse, such as the one that took place here, typically the only thing that can repair it is time. I could not have drawn this one up any nicer. As you can see in this chart, the upper end of the range is about $23. So a breakout above this key resistance could signal the beginning of a new leg higher.
The reason I see huge potential from this space is a combination of the huge base and that Tsumani gap between 33 and 37. For an initial target, these are serious returns. But there are other much smaller stocks that could benefit from a rally in the uranium space.
http://www.marketwatch.com/story/uranium-could-be-a-monster-in-2014-2014-01-17
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