By Hassan
Malik @hmalik21
Uranium
stocks, in general, have experienced a meltdown since Japan’s Fukushima nuclear
disaster in 2011. Yet signs of hope for this sector are emerging. In early
November it was reported that Japan had finally approved the restarting of two
of its 48 idled nuclear reactors. As well, the World Nuclear Association said
there are 71 new reactors under construction worldwide, 27 of which are in
China. Utilities have also apparently jumped into the market and bought more
uranium and many of these sales contracts that were signed last decade are
coming to an end over the next few years.
While
investors have more than a few names to choose from, on the speculative side
some of the smaller cap stocks in this sector are thought to have greater
upside potential. Forum Uranium Corp.
(TSXV:
FDC) is one company that could fit this bill and here are four reasons why this
stock might be worth a second look:
Spot Price on the Rise Recently: The price
of the underlying commodity surged to a recent high US$44 a pound, up 28% from
year-ago levels and about 57% since bottoming out at US$28 during the summer.
Uranium, so far, has been the best-performing energy commodity this year. All
of this points to the possibility of renewed investor interest in the sector
and juniors with good projects could benefit the most if money begins to flow
back into these stocks.
(Image
courtesy of Visual Capitalist:
Please click here for
other cool images)
Share Structure, Financing and a JV Partner: It’s
hard to believe that this $0.10 stock was trading at $6 a share a little more
than three years ago, but such is the nature of this market. The company
currently has a market cap of approximately $3.5 million, about $2.3 million of
which is in cash. It has just over 35 million shares outstanding, which gives the
company room to issue more equity if needed and also it would take relatively
less buying to move this stock higher. Its cash on hand means that it likely
won’t have to issue more equity anytime soon. Forum also has a Joint Venture
(JV) partner now in Uracan Resources to spend money to drill Forum’s Clearwater
Project in northern Saskatchewan.
Strategically Located Assets: Forum
Uranium has six drill-ready projects in the Athabasca basin, where some of the
world’s highest grade uranium has been found, and its Clearwater project is
located next to Fission Uranium’s Patterson Lake South discovery, which was referred
to by one analyst as the “last known high grade, easily open-pittable uranium
asset left un-mined in the world.”
Seasoned Geological Team with a History of
Success:
Forum’s geologists have a history of Athabasca basin discoveries totaling more
than 300 million pounds of uranium oxide.
To
see more of Hassan’s small cap stock ideas, visit the archive here: www.smallcappower.com/experts/products/hassan-malik
Do you wish to share your knowledge of a
particular stock in 300 words or less? If so, please send your submission to sean@smallcappower.com and you could have your article published on
Small Cap Power!
Disclaimer: This article was posted with
the permission of a third-party contributor and the opinions contained
therein do not necessarily reflect those of Smallcappower. Smallcappower
does not endorse any investment advice provided by these third-party
contributors.
Please consult your investment advisor
before making any investment decisions. Ubika Corporation and its
divisions Smallcappower, Ubika Communication and Ubika Research are not
registered with any financial or securities regulatory authority in
Ontario or Canada, and do not provide nor claims to provide investment advice
or recommendations to any visitor of this site or readers of any content
on this site. – See more at: http://www.smallcappower.com/posts/small-cap-power-disclosure
