Rick RuleNexGen EnergyNXE.TOCOMMENTAug 11, 2016

Alternative energy companies haven't done well. Whole uranium sector's been doing well. With the Russia-Ukraine conflict, Canadian uranium's at a premium. A secondary play, may end up doing well. He prefers CCO.

More of a a uranium developer with many large, undeveloped uranium deposits. They just got a permit in Saskatchewan to develop a mine there. The uranium market is growing tight; is a big uptick in electrical utility contracting for uranium to shore up supply. This mine will get built. Things look good, but the company is a little speculative and beyond his risk tolerance.

Uranium has done well but the fast pace may slow down. Wage, materials and interest costs are up so you need to look ahead several years. Wait for a better entry level.

Uranium is hot now and he likes commodities. Nuclear is the history of power. NXE looks overbought now after recently breaking out of its trading range. A high chance it will pull back to its neckline. That's fine as long as it doesn't keep falling.

Is no cash flow, but they're sitting on two monster uranium deposits in Saskatchewan. He likes uranium. The Fukushima disaster is behind us and mindsets are embracing nuclear energy again. This is likely a take-out target given their deposits. It's too speculative for him. They aren't producing and lack cash flow. That said, you can study this to see if there is value, given those deposits.

He likes the uranium space a lot and feels it will do well.  He has sold some uranium stocks at a good profit. NexGen has not yet broken the lid so be neutral on the stock at this time. There are different levels of resistance.

NXE is a $2.7B company that is pre-revenue that operates in the exploration and development of uranium properties in Canada. It has a decent cash balance of $141.3M and an equity position of $481.9M. It does not generate free cash flow, and mostly issues shares and debt to fund its operations. It has performed well over the years, supported by a growing interest in nuclear energy. We like NXE as part of a play on nuclear energy, but would be mindful of its smaller size, that it is pre-revenue, and higher risks from the nuclear energy industry. 
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Two very different beasts in the same industry. NXE will probably have the next project built in Canada. CCO is the granddaddy of traditional mining. Buy NXE if you're looking for the rerate, but with it comes risk. Doesn't see an issue getting fully financed, but then comes execution. Track record for things going according to plan is not great for mining. 

CCO is your best way to get exposure to uranium, which is undergoing a renaissance. Predictability, bit of a dividend, real upside from today's uranium price.

Uranium is part of the materials sector. Seeing signs of improvement, though weakening broadly for a short-term pullback. Longer term, charts look great. With Ukraine-Russia conflict, one of the big suppliers has been taken out of the picture. Series of higher highs and higher lows, a new uptrend. Stocks globally have sold off, and jobs numbers tomorrow will be a big factor if selloff continues or if stocks hold in and start rallying.

There's a big debate over nuclear energy, which can go either way. But what do you do with the uranium after it's used? We overweight the risks of nuclear--it's not as bad as environmentalists think, though what to do with the uranium after use is a real concern. The price of green energy and storage--batteries--will become cheaper than nuclear in the future. That lower cost is the tipping point that will green energy more affordable than nuclear--but we're not there yet.

Uranium has been quite a volatile play. It has marched down to about $2.40 and then broke down further. This is an interesting area on the chart. You should look at CCO-T to get the direction in the area.