Bill Rempel, a.k.a. NO DooDahs!

Uranium Resources (URRE) is a radioactive stock pick this week. As mentioned before, URRE just started trading on the Naz after some time on the OTC – you down wit’ OTC? – and as such, there isn’t much in the way of “research” on the stock.

Yahoo! tells me that Uranium Resources is a half-billion cap company with a trailing P/E of about 24, truly obnoxious P/S and P/B ratios, and a trailing ROA of about 50%. The float isn’t tiny at 47 million, but isn’t huge. No div to speak of. They’ve had lots of technical strength and if you have to ask what they do … go back to sleep. This is a pure play in a sector that has few of them.

Mania? Perhaps. Nice pullback? I think so. Might be worth a trade on the technicals alone?

The “change in control” agreements were amended in Feb 2007 to include Dave Clark, a recent director since 2006, and Craig Bartels, who rejoined the company in 2004. This year’s proxy revamps the restricted stock plan, last addressed in 2004. Occasionally, revamps of these items could mean a company is setting itself up for a sale, but in this case, I dunno – since many of the directors have existing, long-standing “change in control” clauses and I haven’t analyzed all the differences in the 2004/2007 plans. Here’s the proxy.

Uranium Resources is not a company with a long recent track record of financials. While revenue has increased eight-fold over the last three years, URRE has just turned profitable in fiscal 2006, and this is also the first recent year that the balance sheet showed positive equity. The cash flow statement isn’t pretty, with income exceeding cash from operations and lotsa cash coming in from stock issuance. The last earnings were on March 19, and they also

adopted a strategic plan with the goal of URI becoming a 10 million pound producer of uranium by 2014 using both in-situ recovery (”ISR”) and conventional mining and milling methods. As part of its strategy, the Company intends to build its uranium base to between 200 and 300 million pounds through exploration of its own properties and by acquisition.

Now, a roughly forty-fold increase in production over ten years would be something to see. Especially in light of a cash burn that would eat up URRE’s existing reserves inside a year’s time. The circumstances may be extenuating, however. From 1988 to 1999 the company was producing and occasionally profitable, with projects opening and closing depending on the spot price of uranium. Because of the price fluctuations of uranium, the company shut down operations for a few years, and only recently restarted. With the company having some history of profits in the past at much lower uranium prices, it is possible that the company may be profitable in the future at lower-than-current prices. Possible.

The angles are: (1) price momentum and a pullback, perhaps a nice swing trade long; (2) a pure play on a current commodity mania in uranium; (3) long-term potential growth based on the (perceived?) trend towards increased use of nuclear power plants; and (4) potential “under-the-radar” entry because of the company’s recent move to non-OTC trading.

The good-lookin’, good-cookin’ Wifeykins is a gold bug in specific, and a commodity bug in general, so I haven’t been able to mention the name “Uranium Resources” aloud without hearing a “Yes!” from somewhere in the house. Oh, bother.

I will be adding a position in Uranium Resources (URRE) this week, probably tomorrow.

[Update - buying on Apr 24]