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Three Glowing Uranium Stocks

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In the face of fluctuating energy prices and changing regulation, going nuclear may be a good strategy.

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China, India, and Russia have all reaffirmed their commitment to nuclear power. I would say once those come online, China-the amount of nuclear power they're building is enormous, and even if there's another Fukushima by 2013 or 2014, China has not shown any willingness to cut their investments. I think that will overrun any area of the West that will threaten nuclear power to shut it down.

Japan has actually restarted one or two of its nuclear power plants. There was big opposition, but one of the things people don't know about, is in the 1970s, during the OPEC embargo, Japan was also heavily damaged through that. They went over a comprehensive energy reform plan, and based on their study, they realized that they would be dependent on liquid fuels, but base load wise, they could be energy independent through nuclear power.

That reform led to the big '80s bull market in stocks, so that they could easily ramp up production. They had a good supply of base load energy. When Fukushima came, in their trade deficits, they went from surpluses to deficits because they didn't have nuclear power and they couldn't ramp up production. Their exports were limited.

Now, recently they've gotten better due to the falling oil prices. But it went up from around $93 and $94, and their natgas prices have gotten huge, so I don't know how much longer they can sustain the last trade numbers with much higher energy costs.

I would say for those reasons, the Middle East, China, India, Russia, and the biggest reason is also the megatons to megawatts, where the US imports 90% of its uranium. A lot of it is from Russia. Russia has reaffirmed that because of all the social programs promised in the last election, they're not going to continue taking down nuclear warheads and then taking their uranium and selling them to the US for below market price.

That deal came in, I would say in the early '90s, after the Cold War, and it ends at the end of this year, and Russia is salivating to make some money off of uranium exports. I would say those are the main reasons on the big uranium bull.

Kate Stalter: John, we've got about another minute left here. Just to wrap up. Any investments, in regard to industries or specific stocks, where people might want to look?

John Manfreda: Yeah, I would say if you don't have any uranium, I would get Cameco (NYSE:CCJ). Most recently, it had declined in quarterly revenue and cash costs went up, but that's because they decreased production.

Their cash costs right now are $28 per pound, but it accounts for roughly 16% of the world's total uranium production, and it has a massive Cigar Lake project coming online in 2013. And it pays a dividend while you wait.

Another big one is Uranium One (TSE:UUU). That has properties that are geopolitically diversified in Kazakhstan, Australia, and the US. Their cash costs are around $14 per pound. It has $500 million in cash in increased production each year.

The last one I would say is Uranium Energy Corp. (NYSEAMEX:UEC). This company has a reputation with excellent management. It has $26 million in cash with no debt. Management owns 20% of it, 20% of the shares.

Their flagship properties are in South Texas, so when the megatons to megawatts deal ends, they'll be in full position to take advantage of selling uranium to the US consumer. They'll no longer be subsidized from Russia.

Those are the three stocks I would look at. If one wants to dip into uranium, I would say start with Cameco.

Kate Stalter: So John, there was something else you wanted to say about your company's report?

John Manfreda: Yes. I was going to say if people are interested in investing in energy, they can go to our report at our website petroprofitreport.com. We currently have two juniors that have appreciated over 50% and are paying a one-time dividend, and the other one is paying a regular dividend, despite this correction from $110 to $93 per barrel.

Editor's Note: This article was written by Kate Stalter of MoneyShow.

Below, find some more great investing and trading content from MoneyShow:


How to Profit from Oil Fluctuations

Should You Play Energy with Barron's?

Green China Takes Over Red China

Twitter: @TopProsTopPicks
No positions in stocks mentioned.
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