Anatomy of an oversold stock.
I got to believe UEC (4.12) is at a major bottom. UEC remains as a debt-free company and with a very strong cash flow position. I dare to rate it with a strongest buy view possible.
Today I spend some time trying to find out why this stock has taken such a tumble as UEC is by far a top quality company, which I have met the seniors before. Nope, no insider selling (only buying)...and they are in a business where demand exceeds their supply. UEC has the best margins in the business.
The company did report a slightly disappointing 1 Q. '08 but this was very well explained in the mgt. discussion -and so should be a one time event.
I cannot find any reason why UEC shares should be trading at this ridiculous low valuation -other then so many other earnings momentum companies have been way over sold off. The company should earn some 0.55 EPS this year and so trading at low p/e of 7.5, far too undemanding for the top quality firm it is in its sector. Most prudent investors may want to await the 2 Q. earnings report, but my take is the price is at a major bottom now.
I think the overall market will realize once all the 2 Q. earnings come out (next week and until Aug 15) that so many selections are sold just now on fear and emotion, not on reasonable profitability and dividend expectation. With global oil prices correcting and Thai court rulings nailing the guilty, I think rationality will soon set it that in fact things now can get better not worse.
"With the completion of our second factory on a 40-acre plot of land right behind the current factory will provide enough space to potentially triple our total production capacity if fully built up. In addition to being granted BOI status with tax incentives, this second factory will the add much-needed capacity to our pressure vessels business segment. More importantly, it allows UNIMIT to start offering high pressure vessels of up to 125 mm (5 inch) thickness to compliment our existing pressure vessels products.
"With the completion of this second factory and the additional production capacity, especially for pressure vessels, UNIMIT is now well positioned to further expand our global reach which, up to now, has been held back by lack of production capacity. We will continue to implement strategies to expand our global presence and increase our global market share".
From UEC's excellent 2007 annual report.
Which you can see at this link: here (try to open in a new tab)
One of UEC 's biggest shareholders is proven shrewd Goldman Sachs, You can see a list of UEC's biggest shareholders at this link: here
Best Regards,
Paul Renaud.
