The big news was in China MediaExpress Holdings (CCME), which you were stopped out of during two remarkable days of trading. On Thursday, the stock plummeted 33.23% on a questionable analyst report that the company was a fraud. Once it became clear that the brokerage firm issuing the report itself was suspect and that it had bet on the collapse of CCME’s share price, the stock rallied 25.25% on Friday. This morning, the CEO of CCME published a letter on the company’s website denying all allegations made against it last week. You can see a copy of the letter here: http://www.ccme.tv/eng/ir/irprofile.php
Bottom line? I still hold CCME personally and will continue to do so on behalf of my clients at Global Guru Capital. But as far as Global Bull Market Alert is concerned, we have hit our stop loss on the stock and are out of it.
This week’s Global Bull Market Alert pick, Toronto-based Denison Mines Corp. (DNN), revisits a theme that generated our quickest ever triple-digit percentage gains — 111% in three days — with options in Uranium Energy Corp. (UEC) back in November. Although I can’t promise you similar, quick gains for this week’s pick, with uranium stocks breaking out of a long trading range last week, the technicals for uranium stocks again look strong.
Denison Mines Corp. (DNN) is one of the big, reliable plays in the uranium space — an international player with assets in the United States, Canada, Mongolia and Zambia. But the investment case for DNN is about the big picture for uranium as much as anything else.
And that picture of uranium hardly could be better. On the demand side, China’s imports of uranium shot up 380% in 2010. And with China aiming to bring 100GW of nuclear power online by 2020, this is unlikely to change soon. In 2010, the global demand for uranium hit 182 million pounds, outstripping production by 52 million pounds. The difference was made up by recycled uranium from utilities stockpiles and disassembled nuclear U.S. and Russian weapons. But uranium stockpiles already are perilously low and the agreement governing decommissioning missiles expires in 2013. And according to all signs, the Russians have no intention of extending it.
The result? The spot market price for uranium recently has hit $70 per pound. That still only puts the price at half of a pre-crisis high of $140 per pound. In addition, many uranium producers, including DNN, have reduced their production estimates recently for the coming year. That’s putting further upward pressure on uranium prices.
All of these factors add up to a great 2011 for uranium stocks — and a higher share price for DNN.
So buy DNN at market today, and place your initial stop at $2.75. For potentially even bigger profits, I recommend the July 2011 $5.00 call options (DNN110716C00005000), which last traded for $0.60.
Portfolio Update
Alliance Resource Partners LP (ARLP) jumped 5.13% this past week as the bull market in coal continues. The fundamentals of the company continue to be strong. October-December net income more than doubled to $87.4 million, while revenue climbed 40% to $418.6 million. ARLP remains a BUY.
Cognizant Technology Group (CTSH) jumped 5.29% this past week. The company is expected to release earnings today of 65 cents a share on revenue of $1.28 billion. With the stock back above its 50-day moving average, CTSH is back to a BUY.
ELEMENTS Rogers Intl Commodity Agri ETN (RJA) ended the week 2.42% higher, as global food prices continued their upward ascent. As an exchange-traded fund (ETF), this position is not a volatile play, but it remains a BUY.
Bank of Ireland (IRE) rose 8.49%, recovering much of its losses from the previous week. On Saturday, it was reported that the Irish government may make a 1.4-billion euro short-term bridge loan to Bank of Ireland while it continues to seek private sector investment. If this happens (expected by Feb. 11) we’re off to the races. With the stock still under its 50-day moving average, I am keeping it at a HOLD.
Ivanhoe Mines (IVN) rose 4.33% this past week, as the price of copper hit record highs. With the recent rights offering generating $1.18 billion to finance its expansion, IVN is a BUY.
Melco Crown Entertainment Limited (MPEL) fell 1.47% this past week, as Stanley Ho is battling some of his four “wives” and 16 children for control of an empire. But even with recent competition from U.S. rivals such as Las Vegas Sands and Wynn Resorts, MPEL takes more than 50 cents of every dollar bet in Macau. This play on Asia’s Las Vegas remains a BUY.
National Bank of Greece SA (NBG) is now up a whopping 14.61% since I recommended it after my teleconference call on Jan. 15, and is up 10.47% this past week. With Germany and France agreeing to expand Europe’s bailout fund, and NBG trading above its 50-day moving average, it remains a BUY.
Sina Corporation (SINA) soared yet another 12.90% this past week. Sina Weibo — Sina’s version of Twitter — has 87% market share versus all the other Twitter-like services in China. Now up 75.61% since I recommended it in October, “China’s Twitter” remains a BUY.
Spreadtrum Communications, Inc. (SPRD) soared 11.27% this past week. Auriga raised its price target for Spreadtrum to $26.50 from $20.50 after channel checks indicated the company continues to gain market share with strong shipments. This bet on Chinese semiconductors remains a BUY.
Silvercorp Metals Inc. (SVM) jumped another 9.62% this past week. The company received the necessary Chinese government approvals to acquire a 70% equity interest in Yunxiang Mining Co. Ltd., a private mining company in Hunan Province, China. I am keeping a close eye on this one, and looking for an appropriate time to exit for our March $12.50 call options. Trading just under its 50-day moving average, SVM remains a HOLD.
Transocean Inc. (RIG) rose 1.45% this past week. The company expects to take a $1 billion charge in the fourth quarter due to a decline in business as a result of the Deepwater Horizon Gulf rig disaster. With the bad news out of the way, RIG remains a BUY.
P.S. I will be having a special private meeting for my subscribers during the World MoneyShow in Orlando, Fla., on Friday, Feb. 11, at 11 a.m., in the Destin Room of the Gaylord Palms Hotel. If you want to attend my private meeting, please sign up by clicking here. Space is limited.
