National Post: Uranium – bubble or good bet?



January 12 2007 – For most people, uranium — a metal used to fuel nuclear power plants — and the Internet –a vast expanse of useless and crucial information alike — have nothing in common. But last year’s surge in shares of uranium companies has some comparing the speculative nature of the uranium market to the Internet-crazed technology bubble of the late 1990s.

As an indication of this mania, an equally weighted index of uranium stocks created by Blackmont Capital has risen more than 250% since late 2005.

While the firm agrees that there are some similarities in performance with the tech bubble, and that it is fair to question whether uranium stocks are poised to burst, Blackmont expects uranium prices will continue to rise.
They are boosting their uranium price forecast to US$82 per pound in 2007 from US$70, and to US$95 from US$80 in 2008.

Uranium has recently been trading at around US$72 a pound. Prices are up more than 800% this decade in the United States.

Blackmont is also initiating coverage on four uranium exploration companies. It has a “hold” rating on Forsys Metals Corp. (FSY/TSX), with a 12-month target price of $5.40; a “speculative buy” rating on Purepoint Uranium Group (PTU/TSX), with a $1.60 target price; and a “speculative buy” rating on Strateco Resources Inc. (RSC/TSX), with a $3 target price. Blackmont is currently restricted in its research coverage of U3O8 Corp. (UWE/TSX).

The firm is maintaining its “hold” recommendation on Cameco Corp. (CCO/TSX), the world’s largest uranium producer, but is boosting its target price from $41 to $51.

Jonathan Ratner