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Now that the uranium bull market has gone to a new level, a number of exploration stocks made spectacular percentage gains after the International Investment Conference held in San Francisco in late November 2005. We turned to Kevin Bambrough, Market Strategist, and Jean-Francoise Tardif, Portfolio Manager, at Sprott Asset Management for their advice on how to navigate through the more than 250 uranium exploration, development and producing companies available across the global investment landscape. Who better to ask than a fund that has invested around $175 million in uranium stocks the past few years, about 6.7 percent of more than $2.5 billion managed by Sprott Asset Management? The Sprott team has bet heavily on a nuclear energy renaissance, and early indications confirm very strong returns in their investments.

Before our taped telephone interview, Kevin Bambrough emailed a few comments, “We would like to make the point about some incredible gains that have been had in the uranium sector. The list is growing but not the quality so investors should use extreme caution. As the uranium price rises, and money pours into exploration, we can expect to see some sizeable discoveries coming down the road. It should be exciting times.”

Prior to StockInterview.com’s interviews with Mr. Bambrough and Mr. Tardif, they compiled a list of ten tips for investors studying uranium companies. The tips are listed below, followed by an extensive interview, first with Mr. Bambrough (in this installment) and a second installment with Mr. Bambrough and Mr. Tardif.

The Ten Tips Investors Should Know

1. One of the best indicators of a project’s potential success could be past ownership. It’s best to try to buy any mining stock early in the cycle. Try to pick up properties that were worked by majors during the last bull market but which eventually dropped during the lows of the bear market. During the last uranium boom of the 1970’s, many majors decided to completely exit the uranium sector.

2. Study the value of ore body with regards to its value per tonne, or its recoverable metal. Estimate the “all in” costs and feel comfortable with what you are paying. Risks-to-reward doesn’t favor pure exploration. Typically, we avoid pure exploration plays unless management is excellent, they have a large prospective land package, and the company is well financed.

3. Look for good, proven management, which has been successful in the past.

4. Look for solid shareholders. It is always nice to see that management has a large stake in the company. Often, this makes them value their paper more, and they will be less likely to engage in reckless stock issuance. If not management, I get comfort seeing that successful fund managers have large holdings. It is even better to see that a major company in a related industry has taken an interest in the company. Read the rest of this entry »

An options strategy called Covered Call Writing is a conservative strategy designed to reduce risk and increase income when investing in stocks. Briefly stated, stock options are contracts in which you buy or sell the right to buy or sell. Although there are eight types of options contracts, we’re interested here in low-risk “Covered Call Writing.”

Here’s how it works: Say it’s August and you buy 300 shares of XYZ stock at the price of $48 per share. XYZ pays a quarterly dividend of 50 cents per share. Therefore, if the price never moves, you’ll earn 4.2% per year.

At the same time, you would participate in Covered Call Writing. To do so, you, you would “write three January 50 Calls.” This means you are selling (“writing”) the right for someone else to buy the stock from you (they “call” it away) between now and the third Friday of January at the specified price of $50. (All contracts expire the third Friday of the month.)

Each contract represents 100 shares, hence three contracts. The buyers pay you a fee (called a “premium”) of $3.5 per share, or $1,050. (The premium is based on the amount of time until expiration and the spread between the current price and the “strike price,” in this case $50. Therefore, the premium changes constantly.)
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Before shelling out a great part of your retirement savings to buy stocks, it is very important that you know exactly what type of investment are stocks investments. Stock investment is actually buying a small unit of ownership from a company. The stocks you bought from such company will provide you certain benefits like voting rights and then receiving profits every time the company distributes profits to its shareholders. The amount of profit share you are to receive is dependent on the amount of stocks you have bought from such company.

One of the best features of stock ownership is the fact that you as a stockholder of the company are entirely free from any liability however if the company loses a lawsuit and pay a huge amount then you must prepare for the worst since such happenings often lead rendering your stocks worthless.

The good news is you can still prevent such unsightly scenario from happening; all you have to do is to employ the expertise of a stock research provider or a stock broker, whichever you prefer the main objective of your hiring them still remains the same and that is to provide you with effective financial advice on how to lessen the risk of your stock investments and to increase your chances of gaining.

Before implementing any financial strategies, it is important to conduct fundamental analysis. This analysis is accomplished by a stock research provider. The fundamental analysis involves the process of examining the basic of the fundamental financial level of the company or the business which you are eyeing in buying some stocks. The analysis should also include examination of key ratios of a business in order to determine its financial health thus providing you with the idea of the value of its stocks.
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While a growing number of countries have announced their civilian nuclear energy ambitions over the past twelve months, no other country is likely to have more of a psychological impact on the nuclear energy picture than Saudi Arabia. We believe the Kingdom’s natural gas and water problems will lead them to nuclear, sooner rather than later, probably as early as this year.

After our interview with Kevin Bambrough, which resulted in the widely read article, ‘Explosion in Nuclear Energy Demand Coming,” we began more deeply researching Bambrough’s conclusion. He believes the overwhelming growth in nuclear energy will continue to drive the uranium bull market much higher than is suspected. He believes the uranium renaissance has gone beyond the envelope of just a mining inventory shortage. We researched this further during the course of our investigation into uranium and geopolitics. We were surprised by what we discovered, and continue to be stunned by how accurate Mr. Bambrough’s forecast is likely to play out. We included the special sub-section, which follows, in our soon-to-be-published, A Practical Investor’s Guide to Uranium Stocks. Below is a sneak preview.

An April 2006 UPI news item confirmed what many have long believed. It won’t be long before Saudi Arabia launches a nuclear project. Kuwaiti researcher Abdullah al-Nufaisi told seminar attendees in Qatar that Saudi Arabia is preparing a nuclear program. He said the government was being urged to launch a nuclear project by Saudi scientists, but had not yet received the blessing by the royal family. Social, not energy, issues could help the Saudi royals embark on a large-scale nuclear program.

Of the Kingdom of Saudi Arabia’s 24 million subjects, more than 40 percent are under 18 years of age. While still manageable, the country’s infrastructure is not prepared to deal with its explosive population growth. The two biggest problems facing Saudi Arabia are potential water and electricity shortages. True, its super oilfields may also have peaked in production and might move into tertiary recovery, but that is unknown. An Islamic revolution, similar to what Iran suffered in the 1970s is probably foremost in the King’s mind. Civil unrest might come about should his subjects suffer from insufficient electricity and inadequate water supplies. One need only look at the widespread electricity shortages Syria experienced in the 1980s and early 1990s.

As reported in the October 14, 2004 issue of Arab Oil and Gas, the Saudis lag well behind Bahrain, Kuwait, Qatar, and the United Arab Emirates in per capita energy consumption. The rate of natural gas consumption, which produces Saudi’s electricity, increased less than Egypt and Syria. Total energy consumption dropped by 3.5 percent in 1999 and 2000.

The internationally heralded “Gas Initiative” of 1998 was the Kingdom’s attempt to lure major western oil companies back into the country to help develop its natural gas reserves. After major oil companies spent $100 million in due diligence to evaluate the Saudi natural gas reserves, the initiative quietly dropped off the world’s radar screen. A Shell Oil executive, whose company is exploring for gas in the country’s Empty Quarter, told Bloomberg Daily Energy News that this was a high-risk venture with a low probability of finding sizeable reserves. In Matthew Simmons’ Twilight of the Desert, he repeated what he was told by an anonymous senior oil executive, “The reservoirs are crummy.”

The Saudis need water and electricity to match their population growth. Nuclear energy is likely to be the solution to both those problems. Continued dependence upon natural gas may prove a fatal economic and social error for the royal family. Our research forecasts the Saudis should announce a large-scale civilian nuclear energy program in the near future.
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Just as the saying goes, we live in a risky world. Almost everything we do involves some degree of risk. Generally, to invest is to risk… since one is not certain about the outcome of the investment.

According to Wikipedia, investment or investing is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it.

Today, many don’t like to hear the word investment merely because it involves risks. Apparently, to invest is to risk; but we should not because of the risk avoid investing.

It will be much better for one to learn how to manage risks associated with investment rather than avoiding investing totally. A good investor should learn how to manage the various risks associated with every investment. It will not be wise for one to avoid investing merely because of the risks associated with investment.

A potential investor should also know that the risks associated with every investment varies. For instance the risk associated with Stock Investment or Stock Trading is not the same with that associated with forex trading. Likewise, the risk associated with real estate investment also defers from the risk associated with transport business. Every business we do, no matter how small has its own risk.

What is the major fear an investor faces? The major fright investors face is the fear of losing money. Each time you give investment a second thought, the next thing that may come to your mind is that you may be losing your money.
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