Although there has been some strength in the mining sector
lately, the overall trend for the space hasn't been good. The
industry has been hampered by low levels of demand, concerns
about emerging markets, and a strong dollar which has pushed many
investors out of commodities.
While this bearish outlook has manifested itself in silver and
gold miners, a number of other segments have also been hit by
this trend. In particular, the miscellaneous segment-which
includes firms that mine for items like uranium, rare earths, and
palladium/platinum-could also face weakness ahead, such as in the
Cameco in Focus
The Canadian-based firm is a relatively well-known name in the
uranium mining space, operating several properties in the
Saskatchewan province of Canada. The company also has a few
locations in the U.S. Midwest, in addition to a Kazakhstani
property as well.
Beyond their mining segment, the company is also engaged in a
bit of nuclear energy production. This is represented by a
minority stake the company has in Bruce Power L.P. which produces
power in a few Ontario reactors.
Thanks to its relatively diverse operations and the company's
focus on a key product like uranium, CCJ hasn't seen that bad of
a 2013 so far. In fact, the company is positive from a
year-to-date look, adding about 5% in the time frame, though it
has experienced extreme volatility too.
While this definitely represents a bit of outperformance when
compared to others in the space, investors should be concerned
that this will not last in the months ahead. This is particularly
true when investors consider the estimate revision picture, and
projected growth rates for this company.
While CCJ analysts are expecting solid growth for both the
current quarter and next quarter periods, this isn't expected to
translate to the full year time frame. For this time period,
analysts are looking for an earnings contraction of about 15%
year-over-year, well below the struggling industry and its
Furthermore, investors should note that the consensus has
fallen like a stone for the full year time frame, with estimates
going from $1.23/share 90 days ago to their current level just
below $1.00/share. Plus, it isn't like CCJ has a great track
record when it comes to earnings dates, as the over the last four
quarters the company has seen an average surprise of -23.17%.
Thanks to these factors, CCJ has earned itself a Zacks Rank #5
(Strong Sell), suggesting that it is due to fall back to Earth
and underperform peers in the months ahead. And the stock also
has an underperform Zacks Recommendation which means that the
longer-term outlook isn't any better for this firm.
If investors really want to stay in the
miscellaneous segment of the mining industry
, there are only a handful of choices. The space currently has
one of the lowest Zacks Industry Ranks, so top Ranked stocks are
few and far between.
Still, there are a handful of #1 Ranked stocks that could be
worth investing in, including
Avalon Rare Metals (
Impala Platinum (
Stillwater Mining (
. All of these have seen their Ranks surge to the top echelon in
the past week too, and thus they may be better picks than CCJ for
the months ahead.
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