Let’s face it, most people in this line of work love to draw attention to their opinions. Secretly, most analysts and research people want to be like Jim Cramer, preaching the stock gospel to the masses and having them listen and act on every word as if it were the only voice out there.
I said “most,” but not me. In my 20+ years in the business, I’ve found that it’s so much better to fly under Wall Street’s radar and not make any noise about the opportunities that you’ve found. Let everyone else find them after us. When that happens, you get the benefit of having the “Crowd’s Money” do all the work for you as they pour into a stock that you already own.
That’s why I love the fact that you’re not hearing anything about the uranium trade. Here’s the short story on my Behavioral Valuation approach.
- Fundamentals
The last five years have seen a softening in the stance toward nuclear energy. Once considered taboo here in the U.S., nuclear power is gaining traction as an alternative to fossil fuels as out country looks for more sustainable and cleaner energy solutions.
We’re a little late to the show as plans for nuclear reactors on the international scene is in the process of booming, but this development curve is gaining steam.
- Technicals
The technical analysis of the uranium stocks shows that we’ve entered a new long-term bull market and the short-term trading trends are picking-up bullish momentum as investors are beginning to sense the opportunities among these stocks.
Using the Sprott Funds Uranium Mining ETF (URNM) as a proxy, the uranium trade is in the process of beginning what I call a “Volatility Rally” as the URNM price makes a move towards $60.
We saw one of these rallies weeks ago as the URNM shares approached $50, which is a psychologically important price. That surge resulted in a fast 15% rally as traders took advantage of these advances. I expect these to continue, as they are a sign of the longer-term interest in the uranium trade.
Those “trading surges” will help put the uranium trade on the radar of longer-term investors as they hear of the trader’s successes in the media. That’s when things really get fun from a long-term perspective.
- Sentiment
Investor sentiment is still cool to the idea of the uranium trade. You hear me talk about “crowded trades” all the time, and this is not one of them. That’s one of the reasons I love the sector.
To put it simply, Wall Street is not “on” this trade yet. Analysts aren’t providing coverage on companies like Cameo (CCJ), and we’re not reading or hearing about the potential of these companies in the news or the financial media.
That will change. CCJ is trading 550% higher than its 2021 prices. Let’s put that into perspective…
Nvidia (NVDA), the AI darling, is up 400% over the same period. You’re not hearing anything about Cameo’s move.
That’s the bonus.
The Street will start talking about these companies and ETFs, and that’s when everyone else’s money will come in and do the work to push the Uranium trade through the roof.
Bottom Line
I’ve given you the abridged version of my uranium trade analysis, and we could get much deeper, but the simple view of this sector of the market is extremely promising for returns that will firmly outperform the technology giants through 2024 and into 2025.
My two favorite ways to participate in this long-term momentum move are the URNM and CCJ. I do hold both shares in personal accounts and expect each to post 50%+ gains for 2024 as we continue to see the maturation of this industry and its long-term bullish trend.
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.