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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (53799)	9/28/2004 10:49:01 PM
From: rolatzi	Read Replies (2) \| Respond to of 74559

article in Barrons about nuclear: ... One of those, adds Hugh Hendry, an Odey Asset Management money manager also investing in nuclear, is Areva. The 10 billion euro (about $12.26 billion) market cap French firm produces uranium fuel, and designs and constructs nuclear-power plants. It's been getting contracts in China and is a play on high oil prices, Hendry says. Areva's not covered by many analysts and isn't well known, but it will be soon enough, he avers. Both fund managers have been buying Areva recently. Nobody owns these nuclear stocks, says Jeddolah, and Areva is one of the very few remaining firms in the world that can actually design and build a nuclear plant. But before investors go off half-cocked on atomic stocks, there are those risks again. In the case of Areva, with the government or state-controlled entities owning over 90% of the shares, liquidity is poor. And there are no American depositary shares. Hendry, adds, however, that the budget-strapped French government won't be averse to eventually reducing its stake, especially now that the shares have jumped, so the liquidity will improve. Of course, in the short-term that would pressure prices. The stock has hit one 52-week high after another recently, and now stands at €269 per share. Then there's the already rich price-to-earnings ratio of 32 times 2004 consensus profit estimates of €8.36 per share, up from €4.88 in 2003. So many have already discovered it. But a company where earnings could double next year should sell at a high P/E, argues Jeddolah. On the other hand, Areva's market cap is a more reasonable: 0.7-0.8 times annual sales. As noted, there aren't many nuclear stocks, and both managers have also invested in USEC, a Bethesda, Md.-based producer of uranium fuel, and Cameco, a Canadian uranium miner. These stocks are also around highs with lofty P/Es. USEC, however, does offer a 5.7% stock dividend yield... ciao, ro