“The Nuclear Monopoly that Cannot Fail” Wealth Advisory

By Travis Johnson, Stock Gumshoe, August 19, 2008

OK, I’m just about out of time as I rush to begin the fabulous Gumshoe vacation, but I’ve got a quick new one to share with you before I get sand between my toes.

This one is from an ad for the Wealth Advisory, by Steve Christ, and it’s about uranium enrichment.

I can’t go into my whole spiel and do all the explainifyin’ for you at this moment, but I can at least identify the company.

Steve tells us that there’s a massive boost coming for this firm — they have a new facility ready for production by late next year, and they have a near monopoly on supplying fuel for US power plants, they supply more than 50% of the enriched uranium needed for electicity generation in the US, and almost a third of that needed in the entire world.

Most of that supply has come from dismantling old Soviet warheads (I wonder if they’re starting to regret that decision now over in Moscow?), but apparently there will be new supply coming on line next year to make up for that.

Here’s a little excerpt for you from Steve’s letter:

“The ‘End Product’ of our Domestic Nuclear Monopoly

“You see, when this single company begins to open up its new production facility in late 2009, it will hit the market at precisely the right moment.

“Moreover, the U.S. government has basically set up the company with a protected U.S. market… by restricting cheaper foreign imports, largely from Europe. That includes a restriction on imports from Russia into 2020.

“But make no mistake… While this company may be aided by the federal government, it’s certainly no start up. To the contrary, it has an established foothold… with its roots going back to the beginnings of the U.S. nuclear power industry.

“In fact, just last year this company supplied nearly 1/3 of the world’s enriched uranium supply, fueling 150 reactors on 3 continents. All this while meeting over 50% of the U.S. supply.

“But as I mentioned earlier, that feat was only possible using fuel from old Soviet warheads… and that program is rapidly coming to an end. Without the program, only 12% of our enriched uranium would come from domestic sources.

“That has this particular company working feverishly on a plan to replace those resources before they run out for good — one that will help the country rebuild its enrichment capacity before it’s lost to foreign competition.

“Now, understand this… The plant itself has been costly and subject to big cost overruns. And without explicit government backing, investors have been harder to find.

“But with a $2 billion government loan guarantee likely on the way — sooner rather than later — the news itself will catapult shares of this vital company much higher… as investors begin to pour in on the announcement.

“This One Could Be a Double as the News Crosses the Wire!

“And here’s the kicker…

“The stock price is cheap. In fact, it’s trading well below both its book value and its cash per share.

“(But don’t expect this key piece of the nuclear infrastructure to be on the bargain rack for long.)

“Fundamentally and technically, it’s forming an investment springboard that will send its share price on a long, long run.

“The key, then, is catching it at the right time.”

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Steve obviously believes that now is the right time — I don’t know if it is or not, all I can tell you is that this company is …

USEC (USU)

This is an old uranium refining company, and it does indeed have close relations with the US government and it currently suppiles more than half of the demand for US nuclear power plants (thankfully for the Gumshoe, only one company can claim that).

So as I said, no time to research this one in detail, and I don’t know the company well. I’ll be enjoying what I hope will be a uranium-free beach, but feel free to opine on USEC or any of their competitors (like good ‘ol Silex Systems, which I wrote about over a year ago).

Happy Investing!


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farley 5
farley 5
August 19, 2008 3:29 pm

Not the right time.

http://stockcharts.com/def/servlet/SC.pnf?chart=USU,PLUADANRBO%5BPA%5D%5BD%5D%5BF1!3!.25!!2!20]&pref=G

Perhaps if this can break $7.25. No one cares about this one.

RJ&A Canada pegs uranium at $80 in 2010. Remember, uranium is found all over the world including sea water. If the Aussies change their mind and allow more mines, then the price could go to $50.

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