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Author: DaveMcC3300 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 102  
Subject: Re: Value play? Date: 8/26/2006 12:35 PM
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Tart!

You have it right: USU trades below book value. That's unusual.

The charts show that USU has formed a solid base at $10.00, so anything near that price is a great value. Friday's close was $10.23, which is close to the bottom. In December, when USEC suspended their juicy (5.6%) dividend, it was up over $15.00 and bounced back to $14.00 since then.

But the only way USU hits $15.00/share again in the next 12 months is if the U.S. government's energy policy swings strongly toward nuclear power. Nuclear power (USEC serves utilities' nuclear requirements) is the “green” solution if environmentalists get the upper hand in upcoming elections. USEC used to be virtually a federal government agency, but a well run one. It is still the industry leader in centrifuge (uranium enrichment) technology.

Right now, there are only 4 analysts following the stock. Two rate it a “Strong Buy”; one a “Hold”; and one a “Sell”. Reuters rates it “Outperform” in value and growth potential. But there is also some short selling, which is not a good sign. Again, if there is a political lurch toward nuclear power, there will be more analysts covering the stock and probably a surge in share price.

The financials and management of this company are good and improving. I have a “Hold” on my shares. If you like their technology and this segment of the energy market, USU is a “Strong Buy” under $12.50/share. If you're hanging in there hoping USEC decides to use their cash for dividends instead of reducing debt and investing in their centrifuge complex, it's a "Sell”.

Dave
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