A Week In Review...
So as we thought CWPC exploded to the upside on positive news...well lots of positive news. On Monday they received approval by the minority owners of Oilsands Quest to purchase the remaining shares and combine the companies. Then on Wednesday the company announced that they had purchased the overriding royalty on the Saskatchewan land, thus giving investors an idea of the value of their discovery. The company paid $20,000,000 for the rights to the 2.5% royalty (roughly $8,000,000 for each 1%). This puts a total value of $800,000,000 on the project, and keep in mind that these guys do not buy anything unless they are getting a deal. This only set the stage for Friday, because this is when the company indicated that they had received approval on their application from the AMEX for listing its shares (this will begin on August 24). This was the event that we had been anticipating for the entire summer and ended up being the catalyst for a much bigger event that day. As trading went on during the morning the stock approached the $4.60 level which had been a major resistance level for the stock. Then Briefing.com highlighted the company as a stock on the move and that set off the fireworks. the stock then shot through the resistance level within minutes and was off to the races the rest of the day. The stock tried 2x to move through the $5 barrier but could not. Our belief is now that the fresh blood has arrived in CWPC after this initial flurry of news and we will now see a pause (most likely with some consolidation) in the share price. We see that $4.60 as the current support, and believe that the new range forming will be $4.60 to $5.
Our gains from Pitchstone and SXR have all but disappeared and we recently put our money where our mouth was. We doubled our holdings in SXR already and will anxiously await to increase our holdings by up to another 50%, should current market conditions prevail. The reason we are purchasing SXR aggressively is due to the fact that it has hit a major support area that it has recently bounced off of nicely and over the past year was what kept the stock from going higher on numerous occassions. Our experience tells us that this indicates that the stock will move in one of two directions...up or down. However, we feel as though the general direction will be up because that is what the evidence is screaming at us. Uranium keeps setting new highs (as you can see if you use our user friendly links to the right) and will continue to for many years as new nuclear reactors are planned throughout the world and yet excluding the 3 mines due to open in the remainder of 2006 and early 2007 and possible 5 in 2008, there are no others due to open in the near future. SXR will be opening one of these mines in 2Q of 2007 and will simultaneously become one of the worlds largest uranium producers. So they will be selling a product that each day could possibly be worth more and more.
Our research is also telling us that Pitchstone is nearing (if it has not already arrived at) a buying point. We think that C$1.20 to C$1.40 is the area to accumulate shares and that C$2 is an area to begin taking considerations to unload some shares in (for short-term traders). However, we cannot recommend buying Pitchstone at a time when you can get a soon to be world class company such as SXR at the same discount. And keep in mind our prediction that SXR will buy Pitchstone at some point in the future.
We believe that the uranium industry as a whole is also almost through with its consolidation as we said before at this level. Before we recieved what appears to be a suckers rally, but now we should see the real deal because we have finally built that solid foundation to build upon. Our thinking follows the events we are seeing as well. CWPC built up its foundation and then took off on news, and this should happen with Uranium, especially now that M&A activity appears to be picking up once again. "All things Athabascan" was used by Mr. Gartman to describe the bull market in tar sands earlier this year, but we believe that investors will begin to shift to the "All things Saskathewanian" (that may not be a word, but we are using our writer's license to now coin it) school of thought. We have been proclaiming this publicly for the past 7 months, but have been following our thoughts much longer than that by investing in these stocks with our personal capital.
Right now our overall advice is to accumulate on dips and ride out all sideways motion. Patience is a virtue and all investors must possess it in order to achieve truly stellar returns.
Our gains from Pitchstone and SXR have all but disappeared and we recently put our money where our mouth was. We doubled our holdings in SXR already and will anxiously await to increase our holdings by up to another 50%, should current market conditions prevail. The reason we are purchasing SXR aggressively is due to the fact that it has hit a major support area that it has recently bounced off of nicely and over the past year was what kept the stock from going higher on numerous occassions. Our experience tells us that this indicates that the stock will move in one of two directions...up or down. However, we feel as though the general direction will be up because that is what the evidence is screaming at us. Uranium keeps setting new highs (as you can see if you use our user friendly links to the right) and will continue to for many years as new nuclear reactors are planned throughout the world and yet excluding the 3 mines due to open in the remainder of 2006 and early 2007 and possible 5 in 2008, there are no others due to open in the near future. SXR will be opening one of these mines in 2Q of 2007 and will simultaneously become one of the worlds largest uranium producers. So they will be selling a product that each day could possibly be worth more and more.
Our research is also telling us that Pitchstone is nearing (if it has not already arrived at) a buying point. We think that C$1.20 to C$1.40 is the area to accumulate shares and that C$2 is an area to begin taking considerations to unload some shares in (for short-term traders). However, we cannot recommend buying Pitchstone at a time when you can get a soon to be world class company such as SXR at the same discount. And keep in mind our prediction that SXR will buy Pitchstone at some point in the future.
We believe that the uranium industry as a whole is also almost through with its consolidation as we said before at this level. Before we recieved what appears to be a suckers rally, but now we should see the real deal because we have finally built that solid foundation to build upon. Our thinking follows the events we are seeing as well. CWPC built up its foundation and then took off on news, and this should happen with Uranium, especially now that M&A activity appears to be picking up once again. "All things Athabascan" was used by Mr. Gartman to describe the bull market in tar sands earlier this year, but we believe that investors will begin to shift to the "All things Saskathewanian" (that may not be a word, but we are using our writer's license to now coin it) school of thought. We have been proclaiming this publicly for the past 7 months, but have been following our thoughts much longer than that by investing in these stocks with our personal capital.
Right now our overall advice is to accumulate on dips and ride out all sideways motion. Patience is a virtue and all investors must possess it in order to achieve truly stellar returns.
posted by -theinvestar @ 8/20/2006 10:51:00 PM
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