Company description

Thu, 24 Dec 2020 17:02:58 GMT

Centrus Energy Corp engages in the supply of nuclear fuel and services for the nuclear power industry. It operates through the Low-Enriched Uranium (LEU) and Technical solutions segments. The LEU segment has two components which include the sale of SWU and uranium. The Technical Solutions segment provides advanced engineering, design, and manufacturing services to government and private sector customers. The majority of the firm's revenue gets derived from the LEU segment.

Research

Tue, 29 Dec 2020 14:10:34 GMT

Bullish Centrus Energy (LEU) Pitch By GeoInvesting Premium Member Dave Demchak

A Little Background

The above bullish pitch is by Dave Demchak on Centrus Energy, a stock that trades on the AMEX NYSE under the symbol LEU. Centrus supplies low-enriched uranium for commercial nuclear power plants.

When Dave brought us the idea on November 13, 2020, LEU was priced at around 10 dollars per share which he thought presented a buying opportunity given its recent sharp pullback. Maj discussed the idea in a member Q&A video shortly thereafter, and although he found the idea compelling (see Maj's answer to Dave's inquiry below), he decided not to go into too much detail due to GeoInvesting’s overall avoidance of the energy sector.

As you can see by the chart below, LEU performed quite well following Dave’s initial mention of the stock, hitting a peak price of $28.59 on Christmas Eve, but he believes it has some more room to run based on some additional arbitrage. In this talk, he explains why.

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Initial Inquiry and Response, November 2020

"....

Centrus looks very over punished. Do you mind looking at it? just bounced off 200 day MA. I think it can be a good way for a macro play on uranium . strong long term currents but the uranium market is not good now.

https://seekingalpha.com/article/4381359-old-west-investment-management-q3-2020-investor-letter

Old West Investment Management Q3 2020 Investor Letter has a lot to say about LEU

Response

It’s definitely an area we stay from. But it’s interesting that it’s been severely punished. Too many unknowns.
GPR – Just seems like I would never have an advantage against those who understand this industry. However, I would like to fill in some of the pieces in the earnings table to determine if the company has a strong GPR.

Could be a short-term opportunity due to the clean energy industry angle being very trendy right now, post Biden (however where will nuclear energy rank among other clean energy solutions)?

“ It took five decades, but the Democratic Party has finally changed its stance on nuclear energy. In its recently released party platform, the Democrats say they favor a “technology-neutral” approach that includes “all zero-carbon technologies, including hydroelectric power, geothermal, existing and advanced nuclear , and carbon capture and storage.”

That statement marks the first time since 1972 that the Democratic Party has said anything positive in its platform about nuclear energy. The change in policy is good — and long overdue — news for the American nuclear-energy sector and for everyone concerned about climate change. The Democrats’ new position means that for the first time since Richard Nixon was in the White House, both the Republican and Democratic parties are officially on record in support of nuclear energy. That’s the good news.”

Also would need to look at the sales and earnings, beat/miss history. I have a feeling that there could be lots of volatility in the numbers.

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Centrus Energy Corp. (LEU) research, news, and more from GeoInvesting

Company description

Research

Bullish Centrus Energy (LEU) Pitch By GeoInvesting Premium Member Dave Demchak

A Little Background

Initial Inquiry and Response, November 2020