Monday, October 23, 2006

Cameco's Disaster Fuels Uranium Boom (Part 1)

Cameco (NYSE:CCJ TSE:CCO) today shocked the uranium world with news that its massive Cigar Lake would be delayed at least a year because of uncontrollable flooding. This was the second such delay and markets were swift to punish the company, sending it down almost 10%. Conversely, stocks of ALL other uranium mid-tier juniors shot up in reaction. Case in point, take a look at these companies (in descending order of market capitalization):

Paladin Resources (TSE:PDN) up 14.8%
Urasia Energy up (CVE:UUU) up 14.5%
sxr Uranium One (TSE:SXR) up 16.1%
UEX Corp (TSE:UEX) up 9.61%
Aurora Energy (TSE: AXU) up 13.7%
International Uranium Corporation (TSE:IUC) up 5.36%
Uranium Participation Corporation (TSE:U) up 12.8%
Mega Uranium (TSE:MGA) up 8.2%
Fronteer Develoment Group (TSE:FRG AMEX:FRG) up 9.9%
Energy Metals Corp (TSE:EMC) up 23.5%
Laramide Resources (TSE:LAM) up 4.7%
Tournigan Gold (CVE:TVC) up 7.7%
Ur-Energy (TSE:URE) up 14.0%
Altius Minerals (CVE:ALS): up 5.1%
Alberta Star (CVE:ASX) up 3.55%
Western Prospector Group (CVE:WNP) up 7.7%
Strathmore Minerals (CVE:STM) up 2.1%

Now, if an existing uranium investor who had listened to certain analysts in Canada and the United States (Jim Cramer anyone?) say that Cameco is the ONLY uranium stock to buy, I imagine you might be feeling slightly queasy right about now. Yes, Cameco is the uranium giant, but no, it is not the best uranium stock to own at the moment, even without this major announcement today.

As I have stressed in the past, due diligence is an absolute must in the uranium stock field, because there are just so many companies to choose from. As it is foolhardy in my opinion to ignore solid promising mid-tier juniors, it is also foolhardy to lay all your money down in extremely risky, speculative uranium microcaps. I challenge all my readers to do their own due diligence. Avoid the easy play and lay money on a uranium stock just because a bunch of analysts said so. People who did essentially shot themselves in the foot twice, by buying one, and not buying any others..
 

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