I find USEC (USU) undervalued and oversold but I have other reasons to purchase USU as well. I strongly believe in the US/Russia nuclear reduction program ... converting weapons grade uranium to fuel for reactors and energy. USEC is the only United States company processing uranium into fuel. Neither Russia, nor the US government would have the confidence that Russian "weapons grade" uranium processed in another country by another company couldn't be lost, misplaced, stolen .... possibly windi…
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MAGE
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USEC still has positive earnings and cash flow. USEC is funding the American Centrifuge Project (ACP) from cash flow. When the ACP is complete, it will use 95% less energy to produce a Separative Work Unit (SSU) than current technology used by USEC and more importantly, the technology used by USEC's competitors.
The analogy I draw here, is similar to that of Chrysler (C) and American Motors (AMO). Amerian Motors struggled to build its one billiion plus dollars new assembly plant In Bramalia, Ontario, Canada. The market didn't care AMO management was looking to the future. The market pounded AMO's stock. Then AMO wound up assembling Chrysler autos ... and Chrysler wound up buying AMO ... cheap. I did better than +400 %.
I believe that's exactly what's happening here. I believe other companies would like to build what USEC is building, 'till they consider what the "what are ya doing for me right now?" market idiots would do to their stock. So. I believe they'll sit back while USEC gets "punished" for looking to the future ... then attempt to takeover USEC before the same market idiots realize the huge advantage USEC has to either outearn or to put its competitors out of business.
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Q1 of 2009 USU reported a 47% increase in revenue on a 66% increase in sales. This is phenomenal growth. NI and cash flow suffered due to the retirement of debt. This is more good news.
With open agreements with Russian suppliers of Uranium and forward contracts for deliver of processed Uranium, this stock could be back at $20 in one years time.
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