The uranium market has been hot for some time.
Since bottoming in March of 2020 with much of the rest of the stock market, the Global X Uranium ETF (URA) rallied as much as 355%.
And while that fund cooled off over the past few months, there is one stock in this sector that is showing incredible strength.
That stock is Cameco Corporation (CCJ), a Canadian uranium mining and processing company.
Cameco doesn’t have tremendous earnings and sales growth like I typically look for.
However, analysts are forecasting big numbers over the next two years, and today I’m going to tell you why I’m buying the stock.
The Technical Picture
From a technical perspective, the shares are coming out of a multi-month base, and it looks like the stock is about to take off.
Let’s break down the chart, and I’ll show you what I’m seeing…
First, the stock is at multi-year highs. That’s a very good sign, especially in this market.
Second, check out the relative strength indicator in the top panel of the chart above.
Relative strength is pointing up and making new highs.
This shows me that the stock is not only going up, but it is doing so faster than the rest of the market.
In other words, it is outperforming, which is always what I want to see.
Finally, check out the volume indicator in the bottom panel of the chart above.
Take a look at all of the days of heavy accumulation volume over the last several weeks:
This isn’t retail traders buying the stock… These are the “footprints” of big institutional buyers.
And this is exactly the kind of activity that can really move a stock.
How I’m Trading It
I took a half-size position in the mid-$29 area on Thursday morning, and I’m only risking about 7% on the trade.
My plan is to add on to my position if the stock breaks out and follows through on further strong volume.
As regular readers know, this market has been tricky, so I want to see the stock prove itself before going in with a regular position size.
I’ll keep you posted as this trade develops, so stay tuned.
Want More Stealth Trades?
Cameco Corporation is what I would call a “stealth trade.”
While everyone is focused on inflation, interest rates and the Fed, stocks like Cameco are flying under the radar of most investors.
However, there’s clearly some major institutional buying going on, and that’s what makes this a stealth stock.
I have plenty more trades like this inside my premium Stealth Trades research service.
Embrace the surge,
Editor, Stock Surge Daily