Most uranium companies will never have a balance sheet like many oil companies have currently. My point is that often stocks do not trade based on balance sheets. Oil companies won’t stick to buybacks or dividends or debt repayment. Shareholders will want capital programs
1
I think there is a good chance that uranium expectations affecting price appreciation will outpace dividends or buybacks. I have done much better in the market since I stopped trading on balance sheets. Usually the market didn’t come around to my pov
1
I am investing with the hope that O&G pop quickly so I can transfer back to u stocks. The U bull is all but a certainty. The longer the structural deficit continues, the longer the bull and sharper. I am not trading completely out and back b/c I think it will be illogical timing
1
I also believe that this uranium bull will be different as capitally funded projects will demand recycle ratios that are in line with what other industries receive. Cost of capital will be high. There were many mistakes made in the last cycle contracting that they learned from
1
Still don’t see O&G cashflows but they may be better this cycle
2
Yes they have but the market knows that. Expectations are priced in. I think that expectation is probably higher on a demand disruption rather supply flood. To outperform the cashflows have to continue than the market is currently estimating (or some other change in expectations)
3
No point in continuing this when your version of market has selective memory. Hopium is a strong feeling. It is futile for me to present facts in the face of that. Hopefully we can chat at the end of 2022. Good luck!
1
You too. Humility is key when stress testing your thesis. One of my beliefs is that a uranium bull can happen in the face of global recessionary pressures. An O&G bull likely cannot. It’s built into my risk model. Yes the market has a lot of uranium growth built into expectations
1
But those expectations are still heavily risked by the market. I have less risk applied to the structural deficit of uranium supply and demand than the market
1
Here is a simple discounted FCF calc for OXY. I have assumed declining FCF every year from 2022 despite oil prices potentially heading much higher. Assumed zero value for OXY after 2028 as well. And I get a PV of $35bn. And the current market cap is $27bn

Dec 29, 2021 · 7:43 PM UTC

1
Humility is the key! I am not arguing I am right. All I am saying is market assumptions currently for O&G are too low right now and too high for Uranium. I will take an asset valued with very low expectations any day than buying something with sky high growth expectations & 0 CF