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Barbarian At The Gate: Cameco (CCJ)

Stock quotes in this article: CCJ

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Cameco ( CCJ) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cameco as such a stock due to the following factors:

  • CCJ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.8 million.
  • CCJ has traded 638,633 shares today.
  • CCJ traded in a range 211.4% of the normal price range with a price range of $0.81.
  • CCJ traded above its daily resistance level (quality: 40 days, meaning that the stock is crossing a resistance level set by the last 40 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on CCJ:

Cameco Corporation operates as a uranium producer, supplier of conversion services, and fuel manufacturer. The company's Uranium segment is involved in the exploration for, mining, milling, purchase, and sale of uranium concentrate. The stock currently has a dividend yield of 2.1%. CCJ has a PE ratio of 44.8. Currently there are 9 analysts that rate Cameco a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Cameco has been 1.0 million shares per day over the past 30 days. Cameco has a market cap of $7.4 billion and is part of the basic materials sector and metals & mining industry. Shares are down 4.6% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cameco as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 49.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 39.01% is the gross profit margin for CAMECO CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.16% is above that of the industry average.
  • CCJ's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
  • In its most recent trading session, CCJ has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CAMECO CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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