Shares of Cameco (CCJ) have declined ~80% since the March 2011 Fukushima disaster, sending CCJ shares to their lowest levels in more than a decade:
While the uranium (U3O8) spot price continues to dwell in the basement near $20/lb, Cameco shares are trading at attractive valuation multiples (11.1x forward earnings, .74x book) and the company reported an impressive third quarter result particularly given the circumstances. The attractive valuation has even prompted some company insiders to snap up some Cameco shares on the cheap recently.
From a chart perspective CCJ posted its most promising trading session in more than a year and investors now have a clear double-bottom downside reference point to trade against:
A ~12% rally on more than 3x average daily trading volume after CCJ has quietly formed a double-bottom near $7.45 during the last month. Relative strength and money flow are both breaking higher above their respective median lines. One day does not make a trend, however, today is just about as promising as a single trading session could possibly be.
We entered into a long position in CCJ earlier in the trading day in the Trading Lab at CEO.CA. The setup was based upon a combination of factors including bullish options activity which consisted of unusual upside call buys, a large put sale of January 2017 $8 puts, and a combo trade which included purchase of stock and March 2017 $7 puts as a hedge.
DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. The author is long Cameco Corp. (CCJ) at the time of writing and is therefore biased. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.