Denison needs demand

Mar 3rd, 2010 – Comment

When I look at this snapshot of DML at this particular point in time I would say that it will take a lot of new nuclear power plants to be built and demand for fuel to move up aggressively to get this stock moving higher.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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denison

 

Hi Lou!
I am sending this to you from Plainfield, ON. I am a “Homegamer” as Jim Cramer likes to say. Can you find ANY sign of life with this stock. It has drifted aimlessly lower for 3+ years now. Do they at least appear sound financially?

Thank you very much!

Peter

 

Hi Peter,

Denison Mines Corp. ( DML TSX) enjoyed quite the ride as market enthusiasm for the growth prospects in the nuclear energy sector reached full bloom. As with all things its never as good as it looks and its never as bad as it looks and its the investors job to know when to get on or off a ride.

dml

The three year chart paints the picture of the long decline that started in 2007, got a pop in March of 2009 as markets came off the lows, but met resistance at $3.00 in June of the same year. The stock has been giving up ground for most of the last 9 months.

 

 

 

 

dml2

The six month chart provides a view of the recent action in the stock and the resistance its facing on the 200 day moving average in the $1.70 range. The stock is channel trading in a downtrend and needs to break above resistance to move higher.

In the last quarter reported by the company revenue was off significantly and the stock was generating a loss from operations. These are not generally the kind of fundamentals that push a stock higher. Excitement flooded into the uranium sector as oil reached $150 a barrel and it was those emotions that took DML towards the $16 level.

When I look at this snapshot of DML at this particular point in time I would say that it will take a lot of new nuclear power plants to be built and demand for fuel to move up aggressively to get this stock moving higher.

Happy Capitalism!

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