This morning, if it is a stock related to uranium then it is probably up.  This is in the face of what is a very slow launch of uranium contract trading on NYMEX (NMX-NYSE) that we alerted last Friday.

USEC Inc. (USU-NYSE) is trading up 5% more at $23.94 and the stock earlier today traded a dime above the old yearly high of $24.34.  This is actually a multi-year high that may in fact be an all-time high.

Cameco (CCJ-NYSE) is also up 2% to $50.68 today.  If you listened to their conference call last week you would scratch your head over this.  Almost every single analyst that asked questions after the update to the company’s Cigar Lake floode was vicious and lashing.  The company didn’t really address the concerns from how it sounded.

Cramer’s pick, Energy Metals Corp. (EMU-NYSE) is trading up more than 5% on the day.  Uranium Resources (URRE-NASDAQ/OTC) posted a 300% revenue gain to $4.6 million.  This is a tiny number on a microcap stock, but those are things that swing traders and metals speculators look for.  Shares are up almost 4% to $9.90.  Even the small uranium wild catting play, Uranerz Energy (URZ-AMEX) is up 1% today.

This all flies in the face of what has been a very slow start to the Nymex uranium contract trading.  According to the website at Nymex, the open interest was a whopping 37 contracts since the contract debuted on Monday.  The large uranium miners and processors said they were going to stay on the sidelines for a while to see what would happen and how the contracts would be received.  Based on that open interest it doesn’t look like the big layers are coming in to trade the contract any time soon.

Jon C. Ogg
May 11, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Uranium prices, and many of the underlying stocks that either mine it or explore it or are involved in the processing are way up from prior months.  This sector will get more interesting next week and it has been given very little exposure for something of this magnitude.

The New York Mercantile Exchange (NMX-NYSE) is going to start trading a URANIUM FUTURES CONTRACT on Monday.  You can visit the site and see the summary of details on the contracts that are available.  There were some details that the exchange made public on April 16 and it is worth a read.

It is quite odd that this has not been a US market yet, because as far as most of us know the price is basically set weekly.  What is a bit odd is that the terms are not quite the same as what the industry has used and many of the indications are that the major uranium players themselves are going to sit on the sidelines for a while.  That may or may not hold true in a few months but for now it seems like the speculators and trading firms are going to be the ones involved.

Some of the underlying shares were making major moves a few weeks ago, but some have slown down or stalled during the earnings flood over the last 3 weeks.  Most of these stocks are also either micro-cap companies with loose involvement in the grand scheme of things or they are smaller companies in Canada.  There are still at least some decent sized stocks that can be reviewed in the sector:

USEC (USU-NYSE) is the pure-play that most US investors use as a bogey.

Cameco Corp. (CCJ-NYSE) is far larger as the largest producer in the world and based in Canada.  They are holding a conference call to give an update to the two floods at the Cigar Lake uranium project in Saskatchewan.

Energy Metals (EMU-NYSE) was Jim Cramer’s play on the huge spike in the sector.  Cramer also came out with the two stealth plays in the sector. He also noted Mosaic (MOS-NYSE) and CF Industries (CF-NYSE) as stealth plays in the sector that can enrich uranium from phosphate, but you should know that prices have to be very high and have to be expected to remain very high for those to be cost effective. Here is what he said on these.

We had noted a safety net at the end of 2006 that uranium and nuclear energy investors could look at after Merrill Lynch made some incredibly strong calls for 2007 to 2008.

There were also many of these that were up huge in early April, and here is what was indicated at the time.

Uranium Resources (URRE-NASDAQ) $9.44; April 12 $9.68, DEC 11 $5.96.

U.S. Energy Corp. (USEG-NASDAQ) $6.54; April 12 $5.77; DEC 11 $5.58.

Uranerz Energy Corp (URZ-AMEX) $7.03; April 12 $6.38, DEC 11 $3.83.

There is even a note in the National Post in Canada showing that Raymond James has made some Canadian picks that could be buyouts in the sector.

It is hard to imagine that the contracts will gain a major foothold until the major producers and explorers to come into the actual exchange and participate in the liquidity.  These contracts may offer them some added hedging and liquidity, but it sounds like they are going to wait and see how this goes before they change the time old traditions of current uranium trading. 

Jon C. Ogg
May 4, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in any of the companies he covers.

On a call-in Cramer said he also liked Ralph Lauren (RL-NYSE) since it is reacquiring all of their global licenses outstanding.

Cramer also came out discussing that Uranium has gone throught the roof.  He already gave a pick on Energy Metals (EMU-NYSE) back in February, and here’s what he said then.  He has two stocks that you can speculate on in the sector.  He says that you can extract Uranium from Phosphate.  It costs $50.00 per pound to do it (very expensive historically) but with Uranium at $113 per pound then you can look at Mosaic (MOS-NYSE) and CF Industries (CF-NYSE).  There are unintended consequences though because it can drop the price drastically.  Cramer noted that these companies have both done this in the past, and he said he likes them even if Uranium prices come back down.  With the number of nuclear power plants coming online, Cramer thinks that will be a big win.