Over the past year I have noticed that Cameco (CCO) will make an appearance every few months in the technical and fundamental research that comes across my desk. This week it happened again, with one particular technical analyst making the case for the third time in 12 months as to why the stock is poised to rise to interim highs if it can just break through resistance in the low 20’s. (CCO currently trades near $20). This kind of research is focused on the shorter-term. As a result, when things don’t unfold in a timely manner, repeating the initial call is common practice unless there has been something dramatic to change the viewpoint of the technical analyst.

In addition, there have been a number of fundamental analysts, as well as one of the few newsletter writers that I actually like, who have all made a very compelling long-term case for buying the stock.

The long-term story is fairly simple. The world’s energy needs can’t be met through fossil fuel sources and alternative (green) sources continue to be extremely disappointing at this stage. As a result, relatively clean nuclear energy will be the eventual choice, especially for current energy-importing countries that don’t appear to have potentially dazzling shale deposits to be discovered and tapped.

So, why is CCO stuck in a range? (See chart above).

One word: Fukushima.

The incident in Japan still resonates with the public. In fact, it is still allowing for the press to publish stories that border on extremism. This week, there was a story that highlighted a speech by David Suzuki who stated that if another earthquake of greater than 7.0 were to hit Fukushima right now, the West Coast of North America might have to be evacuated. While there has not been a rush of scientists scrambling to back up Dr. Suzuki’s claim, the mood is sufficient to let the story stand without a whole lot of rebuttal.

So, it will take time for this issue to pass. Eventually, tough choices will have to be made and pragmatism will take charge. At this stage, the cost and benefits of more nuclear energy will have to be given a fair hearing. CCO should look a lot more reasonable and may be able to break the tether to its current trading range. But, waiting for that to happen also has its costs.

Cameco Corporation is not held in the McIver-Jasayko Model Portfolios as of November 8, 2013. Comments about these investments are not intended as advice and do not constitute a recommendation to buy, sell, or hold.

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