HOW TO START A URANIUM STOCK PORTFOLIO WITH $10,000
A $10,000 Uranium Stock Portfolio
Hombre Munchkin | 04-30-06| 06:37 PM|
The following article will provide you with some of the Munchkin Man's ideas on how you might go about the task of constructing a sound Uranium stock portfolio with $10,000.
Please consider this article only as a "rough draft." The Munchkin Man even wrote a "rougher draft" a while back in the middle of a thread over on the Alternative Investments Forum.
The Munchkin Man has decided that this topic deserves a separate thread. One which will be constantly evolving as time goes on. One where others can feel free to join in, express their thoughts, agree or disagree with anything which is written, and offer a few Uranium picks and investing ideas of their own.
If you disagree with the Munchkin Man, that's wonderful. The Munchkin Man wants you to disagree, in order to permit the expression of as many different Uranium investing ideas as possible.
So without further ado, the Munchkin man shall now begin.
As the Munchkin Man sees it, your first goal is to determine your general tolerance for risk. Imagine a scale from 1 to 5 and give yourself an estimate of how much risk that you are willing to take with a Uranium stock portfolio.
The meanings of these scale numbers are shown below:
1 -- You are a very conservative investor and want to invest in Uranium with the least amount of risk.
2 -- You are a conservative investor but would be willing to take on a small amount of risk with your Uranium stock portfolio.
3 -- You want to construct a balanced Uranium stock portfolio with a moderate amount of risk.
4 -- You would like to construct a Uranium portfolio with a moderately high amount of risk.
5 -- You would like to construct a Uranium portfolio with a very high amount of risk.
No matter how you rate yourself, your goal is to establish a "baseline" starting Uranium stock portfolio with which you feel comfortable.
<snip>Part 2
If you rate yourself as a 1:
The Munchkin Man would advise you to consider investing 100% or $10,000 of your Uranium money into any combination of Cameco Corp (CCJ) and/or BHP Billiton Ltd (BHP).
Cameco (CCJ) is the largest Uranium producer in the world and is the premier blue chip Uranium stock in the world today. In terms of safety, it is arguably the least riskiest of the Uranium stocks.
BHP Billiton (BHP) is a also a blue chip stock whose company owns the largest mining company in the world. It is the world's fourth largest producer of Uranium.
It is also the world's second largest copper producer, the world's second largest exporter of energy coal, the world's third largest producer of nickel, the world's sixth largest producer of alunimum, a significant producer of oil and gas, and also has substantial interests in diamonds, silver, and titanium. BHP also pays a higher dividend than CCJ.
The Munchkin Man prefers Cameco (CCJ), due to the fact, that it is the purer of the two blue chip Uranium plays. For this reason, the Munchkin Man has most of his blue chip Uranium money invested into CCJ.
Only recently has the Munchkin Man begun to invest in BHP, through a monthly plan with sharebuilder.com. The Munchkin Man will take a larger position in BHP as soon as funds permit him to do so.
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If you rate yourself as a 2:
The Munchkin Man would advise you to consider investing 75% or $7,500 of your Uranium money into any combination of Cameco Corp (CCJ) and/or BHP Billiton(BHP) and equal amounts of the other 25% or $2,500 of your Uranium money into some of the other Uranium stocks the Munchkin Man will list shortly.
One way to accomplish this would be to invest $500 into 5 of these Uranium stocks for a total of $2,500.
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If you rate yourself as a 3:
The Munchkin Man would advise you to consider investing 50% or $5,000 of your Uranium money in any combination of Cameco Corp (CCJ) and/or BHP Billiton (BHP) and equal amounts of the other 50% or $5,000 of your Uranium money into some of the other Uranium stocks the Munchkin Man will list shortly.
One way to accomplish this would be to invest $500 each into 10 of these Uranium stocks for a total of $5,000. A riskier play idea might be to invest $1,000 each into 5 of these Uranium stocks for a total of $5,000.
Why does the Munchkin Man consider the latter play as riskier? If you invest in 5 stocks, each one has a 20% chance of failing. If you invest in 10 stocks, each one has a 10% chance of failing.
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If you rate yourself as a 4:
The Munchkin Man would advise you to consider investing 25% or $2,500 of your Uranium money in any combination of Cameco Corp (CCJ) and/or BHP Billiton (BHP) and equal amounts of the other 75% or $7,500 of your Uranium money into some of the Uranium stocks the Munchkin Man will list shortly.
One way to accomplish this would be to invest $750 each into 10 of these Uranium stocks for a total of $750. Another way, albeit riskier, would be to invest $1,500 each 5 of these Uranium stocks.
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If you rate yourself as a 5:
The Munchkin Man would advise you to consider skipping Cameco (CCJ) and BHP Billiton (BHP) altogether and invest equal amounts of 100% or $10,000 of your Uranium money into a minimum of 10 of the other Uranium stocks which the Munchkin Man is about to list.
One way to accomplish this is to invest $1,000 into 10 of these Uranium stocks.
<snip>Part 3
The Munchkin Man shall now list these "other" Uranium companies he was referring to earlier.
These are often called the "junior explorers." One well known newsletter writer likes to call some of them "chihuahuas." Some of them have been called "minnows."
Here they are:
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Alberta Star Development Corp
ASXSF.OB
CanAlaska Ventures
CVVLF.OB
Cash Minerals Ltd
CHX.V = CHXMF.PK
This is a Clean Coal and Uranium combo play.
Dejour Enterprises Inc
DJE.V = DJEEF.PK
Fronteer Development Group Inc***
FRG
JNR Resources Inc***
JNR.V = JNRRF.PK
Laramide Resources Ltd***
LAM.V = LMRXF.PK
Mega Uranium Ltd***
MGA.V = MGAFF.PK
Paladin Resources Ltd***
PDN.TO = PALAF.PK
Summit Resources Ltd.
SMM.AX = SRCSF.PK
This is a very undervalued but up-and-coming Australian Uranium play.
SXR Uranium One Inc***
SXR.TO = SXRFF.PK
Titan Uranium Exploration Inc.
TUE.V = TUEFF.PK
UEX Corporation***
UEX.TO = UEXCF.PK
Uranium Resources New
URRE.OB (Formerly URIX.OB)
Volcanic Metals Exploration Inc.
VME.V = VMEVF.PK
This is the Munchkin Man's newest Uranium pick.
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There are a total of 15 of these Uranium stocks listed above. In accordance with the Munchkin Man's personal biases, these are the ones the Munchkin Man believes that deserve your strongest consideration at this time.
Others may not agree with the Munchkin Man's selections and may want to add their own picks to replace them.
Once again, the Munchkin Man encourages them to do so. One reason why the Munchkin Man created this thread was to make availabale to you as many Uranium investing ideas as possible.
In any event, as time goes on, the Munchkin Man expects to be adding to this list as he discovers more and more Uranium stocks to his liking.
You will also note that the Munchkin Man added *** after the names of 7 of these stocks. These are the Munchkin Man's personal favorites out of this list at the present time. The Munchkin Man also expects to be adding a few more of these as well.
The only reason why the Munchkin Man doesn't own all of them is because the Munchkin man can't afford all of them at this time.
<snip><snip>Part 4
Are there any more Uranium stocks out there? You bet!
Here are a couple of other big names that some Uranium investors like:
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Strathmore Minerals Corp
STM.V = STHJF.PK
Urasia Energy Inc
UUU.V = UAEYF.PK
Uranium Participation Corp
U.TO
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However, there are a number of Uranium "insiders" who do not like these companies.
Some do not like Strathmore Minerals Corp because they distrust their management and believe that the amount of land the company owns is disproportionately greater than the amount of Uranium that is actually there.
Some dislike Urasia Energy Inc because of various tax issues involved with owning the company.
Uranium Participation Corp stands out because it is not a Uranium mining company. Instead, it is a holding company which invests in assets of Uranium "above the ground."
Some investors like this idea. Some don't. The Munchkin Man is "neutral" on this one.
In addition, there are a lot more Uranium companies out there. In fact, they are springing up like mushrooms. Once again, the Munchkin Man may very well be adding some of these newcomers to his list as time goes on.
What if owning a round number of shares for each of your Uranium stocks is more important to you than investing equal amounts in each one? That's okay too.
In actual practice, it is extremely doubtful that you will be investing equal and exact amounts into your Uranium stocks anyway. The portfolios the Munchkin Man has presented thus far are merely theoretical
models.
If you feel more comfortable buying 1,000 shares of Uranium stock ABCDE at $0.75 a share and 1,000 shares of Uranium stock VWXYX at $1.25 a share, then go for it.
It's your portfolio. Your creation. Your baby.
The Munchkin Man would like to make another point. Some people have this feeling inside that they shouldn't invest in any stock unless they are able to invest a minimum of $1,000 into that stock.
The Munchkin Man doesn't feel this way.
Case in point. One of the first Uranium stocks the Munchkin Man bought was Laramide Resources Ltd (LAM.V and LMRXF.PK) in January of 2005. The Munchkin Man bought 1,000 shares at $0.79 a share. This came out to an investment of $790 plus the usual commissions.
Back then a couple of posters laughed at the Munchkin Man for making this investment. Now the Munchkin Man is laughing at them. As of this writing, this stock is at $6.94 a share.
$6.94 X 1,000 shares = $6,940.
Here's another thought. Suppose you have an account with sharebuilder.com and would like to invest in Uranium through their monthly plan. As mentioned earlier, the Munchkin Man is doing exactly that right now with BHP Billiton (BHP).
To the Munchkin Man's knowledge, you can only invest in 3 of the Uranium stocks listed in this guide with sharebuilder.com.
Those Uranium stocks are Cameco Corp (CCJ), BHP Billiton (BHP) and Fronteer Development Group (FRG).
That's because ShareBuilder only allows you to invest in those stocks which trade on the major U.S. exchanges.
If you are interested in ShareBuilder, here is a link:
SHAREBUILDER
There are other online investing programs similar to ShareBuilder, but the Munchkin Man has no personal experience with them.
The guide the Munchkin Man has provided you here is exactly and only that -- a guide. The bottom line is that there are an infinite number of ways to allocate $10,000 into a portfolio of different Uranium stocks. The Munchkin Man has only provided you with a few models to think about.
Once again, if you have a different model in mind that you would like to try, go for it.
The Munchkin Man is hearing one more question. What if you only have $5,000 to invest in Uranium instead of $10,000?
That's simple enough. Just take every figure the Munchkin Man has provided and divide by two. Everybody has to start from somewhere.
Only $2,000?
Hmmmmmmm.
The Munchkin Man would probably advise you to invest all of it into any combination of CCJ and/or BHP for the time being and then purchase additional Uranium stocks as funds become availabale.
Finally, please perform and complete the best of your very own due diligence and research, if and before you decide to purchase any of the Uranium stocks mentioned in this article, as well as any Uranium stocks not mentioned in this article.
The Munchkin Man will close for now by wishing you the very best of success and profitability with whatever Uranium stock portfolio you ultimately decide to create.
Good luck to you.
Best Wishes,
Munchkin Man
socialize.morningstar.com
Comments:
4. Some great points
Endymion| 04-30-06 | 08:52 PM
I like how you pointed out that small investments into these companies can really pay off. I myself have 4 uranium companies in my portfolio that I did not spend over $1000 for. They include Abaddon Resources(ABNAF), CanAlaska(CVVLF), Cash Minerals(CHXMF), and Northwestern Mineral(NWTMF). All of these stocks are under a dollar and therefore invest into them how I feel best for my uranium portfolio. Sometimes I want to just get my foot in the door of some of these smaller juniors, and if they do take off, then I can add to my position if I so choose.
5. MM Sir
jefcek| 04-30-06 | 09:16 PM
Do you have any entry points for these stocks... aside from half now and half later?
Thanks in advance.
Best,
Jeff
6. Cameco & BHP
charlottebandit| 04-30-06 | 10:32 PM
Those are two blue-chips that will continue to grow like a growth stock and continue to have dividend growth for years to come.
I'm a Category 3 investor when it comes to uranium stocks. 50% split between CCJ & BHP, and 50% into near-termers and exploration juniors.
Most energy-related blue-chippers are buy-n-hold stocks that should be anchors in any portfolio.
7. Uranium Exploration Juniors
charlottebandit| 05-01-06 | 09:07 AM
.
Just wanted to some uranium exploration jrs (not near-termers) that I have or am currently watching as long-term plays. This way, it won't seem as I'm pumping certain stocks.
- Titan Uranium (TUEFF)
- Summit Resources (SRCSF)
- Alberta Star Development (ASXSF)
- Pathfinders Resources (PFDFF)
- CanAlaska (CVVLF)
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- Toro Energy (Australian Exchange)
- Monax Mining (Australian Exchange)
charlottebandit
8. To Endymion -- Re: Post # 4
Hombre Munchkin| 05-01-06 | 05:43 PM
Greetings Endymion:
Thank you very much for writing to the Munchkin Man.
You wrote:
"I like how you pointed out that small investments into these companies can really pay off."
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Thank you. The Munchkin Man tries to give prospective Uranium invesors with limited funds a little bit of incentive and encouragement.
In principle, the Munchkin Man sees nothing wrong with buying 1,000 shares of a Uranium stock selling for $0.50 a share if your funds are limited.
______________________________
You wrote:
"I myself have 4 uranium companies in my portfolio that I did not spend over $1000 for. They include Abaddon Resources(ABNAF), CanAlaska(CVVLF), Cash Minerals(CHXMF), and Northwestern Mineral(NWTMF)."
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Of the four stocks you mentioned, the Munchkin Man owns CanAlaska Ventures (CVVLF) and Cash Minerals (CXHMF).
The Munchkin Man used to own Consolidated Abbadon Resources (ABNAF). Unfortunately, the Munchkin Man got impatient and sold it because there was a long period of time last year when its share price sat around and did absolutely nothing for several months.
Lo and behold! Its share price is now about 4 times what the Munchkin Man sold it for.
The Munchkin Man learned a big lesson from this and other similar misjudgements the Munchkin Man has made in the past. These junior Uranium mining stocks take a great deal of PATIENCE.
If your due diligence has told you that one is worth keeping, just stick it in a drawer and forget about it for a year.
Well, you can look at it periodically, but don't fret over it on a daily basis.
What the Munchkin Man is advising is not to prejudge it until about a year after you have bought it. Unless, of course, the company meets with some catastrophically bad news which screams "Must Sell!"
Northwestern Minerals (NWTMF) is on the Munchkin Man's "watch list" for a possible future buy. Hopefully, the Munchkin Man will be able to catch it while it is still $1.00 a share.
__________________________________
You wrote:
"All of these stocks are under a dollar and therefore invest into them how I feel best for my uranium portfolio. Sometimes I want to just get my foot in the door of some of these smaller juniors, and if they do take off, then I can add to my position if I so choose."
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BRAVO!!!
The Munchkin Man hears EXACTLY what you are saying and where you are coming from. Establish a small position first and then buy more into a trend of strength. This is the same strategy the Munchkin Man tries to employ.
The Munchkin Man shall close for now by thanking you once again for writing and by wishing you the best of success and future profitability with your Uranium stock portfolio of choice.
Good luck to you.
Best Wishes,
Munchkin Man
9. To Jefcek -- Re: Post # 5
Hombre Munchkin| 05-01-06 | 05:58 PM
Greetings Jeff:
The Munchkin Man would like to thank you for your inquiry.
You asked:
"Do you have any entry points for these stocks... aside from half now and half later?"
_____
Please forgive the Munchkin Man if what the Munchkin Man is going to write sounds like a simple minded answer.
Out of the Munchkin Man's list of those 15 junior Uranium mining stocks he cited, the Munchkin Man rates each and every one of them as a BUY NOW.
The Munchkin Man has some other Uranium stocks on his personal list which the Munchkin Man rates as DON'T BUY YET.
In order to minimize any possible confusion, the Munchkin Man did not list those.
If and when the Munchkin Man upgrades any of them to a BUY NOW rating, the Munchkin Man will post them in this thread.
If and when the Munchkin Man downgrades any of the 15 junior Uranium stocks he listed to DON'T BUY YET, the Munchkin Man will also post them in this thread.
Here is an interesting point. One major newsletter writer rates Cameco Corp (CCJ) as a HOLD. For this writer, this is equivalent to DON'T BUY YET.
The Munchkin Man disagrees with this writer on this one point. The Munchkin Man rates CCJ as a BUY NOW.
Once again, the Munchkin Man thanks you for your inquiry.
Once again, the Munchkin Man apologizes for his simplistic answer.
The Munchkin Man will close for now by wishing you the best of success with whatever Uranium stock portfolio you ultimately decide to create.
Good luck to you.
Best Wishes,
Munchkin Man
10. To Charlottebandit -- Re: Post # 6
Hombre Munchkin| 05-01-06 | 06:18 PM
Howdy Charlottebandit:
The Munchkin Man would like to thank you for your contribution to this thread.
In regard to Cameco Corp (CCJ) and BHP Billiton Ltd (BHP), you wrote:
"Those are two blue-chips that will continue to grow like a growth stock and continue to have dividend growth for years to come."
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The Munchkin Man fully agrees with you.
For the young investor who doesn't have enough spare change to make a decent lump sum investment in one or both of these stocks, the Munchkin Man considers the sharebuilder.com plan a decent way to get started.
______________________________
You wrote:
"I'm a Category 3 investor when it comes to uranium stocks. 50% split between CCJ & BHP, and 50% into near-termers and exploration juniors."
_____
The Munchkin Man is more of a Category 4 investor, with about 25% into CCJ and now just beginning with BHP, with the other roughly 75% into some of the junior exploration companies.
__________________________________
You wrote:
"Most energy-related blue-chippers are buy-n-hold stocks that should be anchors in any portfolio."
_____
Agreed and very well expressed.
Thanks again for your input.
Good luck to you.
Best Wishes,
Munchkin Man
11. To Charlottebandit -- Re: Post # 7
Hombre Munchkin| 05-01-06 | 06:38 PM
Hello Charlottebandit:
Thank you very much for writing,
You have intrigued the Munchkin Man with the following two junior Australian stocks you cited:
______________________
***Toro Energy (Australian Exchange)
***Monax Mining (Australian Exchange)
______________________
The Munchkin Man has just taken a quick tour of their home pages and is now even more intrigued.
TORO ENERGY
MONAX MINING
Thank you very much for bringing these to the attention of the Munchkin Man's radar screen.
The Munchkin Man is going to have to take a closer look at these. It would be great to find the next Paladin before "somebody" recommends it.
Thanks again and good luck.
Best Wishes,
Munchkin Man
12. Is there an initial post on uranium...
Lorraine10| 05-04-06 | 05:13 PM
by the Munchkin Man or someone else, explaining the reasons for the uranium emphasis? Is it nuclear energy, or are there other possibilities on the horizon, as well?
I'm thinking there must be an initial discussion about this that I can refer to?
13. Lorraine
charlottebandit| 05-04-06 | 06:07 PM
You are quite correct about uranium being the primary fuel used in nuclear reactors (electricity).
Currently, the demand is about 180 million pounds of uranium being used globally, while the supply is currently about 100 million. How could that be!!??!!
The US & Russian govt, along with surplus from the last uranium boom, have been meeting the deficit for the last decades and are dwindling down to very low supplies which is one of the reasons that the uranium spot price has gone up from $7 lb to over $41 lb in 3 years. Unlike other fuels, it takes several years to get a uranium mine online into production because of several permit hurdles to jump through. Not only that, China wants to increase 2 nuclear reactors every year to 2020 which will create a wider gap between supply and demand.
When these nuclear reactors don't have uranium, the lights will go out. Period.
Recommend doing a google search using "uranium + shortage" and read up on this to see how real this threat/bull-market is.
- charlottebandit
14. One more thing lorraine
charlottebandit| 05-04-06 | 10:09 PM
You might want to take a look at the following thread concerning uranium plays (preferably after doing some due diligence on the uranium shortage first if possible) The $10,000 Uranium Portfolio by Munchkin Man.
MM has set up different allocations depending on risk levels you feel comfortable with. From there, him and I included several uranium exploration juniors that we've looked into. For near-term production, I have isolated that category to Paladin Resources (PALAF.PK) and SXR Uranium One (SXRFF.PK) for myself. I have kept and sold several others for other reasons as I've studies up more & more and found what was better for me.
Always ensure you do due diligence before buying any stocks, especially from the Internet.
(also, do a search for uranium here at *M forums and read up on tons of info Munchkin Man, myself, and others have left to help you if you like.)
15. Duh!!!!!
charlottebandit| 05-04-06 | 10:11 PM
How retarded of me. I posted a link to THIS thread. For some reason, I thought I was on another thread answering Lorraine's questions.
:)
16. Thanks, CharlotteBandit.
Lorraine10| 05-05-06 | 10:11 AM
I will do some research on this. Sounds promising to me.
17. A New Uranium Pick
Hombre Munchkin| 05-14-06 | 03:38 PM
Greetings To All:
In Post #2 of this conversation thread, the Munchkin Man provided a list of 15 "junior explorer" Uranium stocks that the Munchkin Man deemed to be worthy of consideration in the construction of a sound Uraniuim stock portfolio.
The Munchkin Man would now like to add one more to his list for a total of 16:
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Crosshair Exploration And Mining Corp
CXX.V = CXXUF.PK
The Munchkin Man was first inspired to add this one to his list after listening to a video interview with Peter Grandich on ROB-TV, which was held Friday evening, on the date of May 12, 2006.
Here is a link to that interview:
PETER GRANDICH ON MINING STOCKS
Although the bulk of his interview is devoted to junior gold mining stocks, he cited his number one pick as being a Uranium stock, which is, sure enough, Crosshair Exploration And Mining Corp (CXX.V = CXXUF.PK).
After doing some additional research and due diligence on this Uranium stock this weekend, the Munchkin Man concluded that this one was worthy of being added to his list.
The Munchkin Man does not have a position in this stock at the present time. However, the Munchkin Man is giving strong consideration to taking a position during this coming week.
In addition, when Peter Grandich was asked for his outlook for Uranium overall, he said that it is a "no brainer" and that "it is going nowhere but up."
He also gave his latest price projection of Uranium as at least $75 a pound.
The Munchkin Man will be updating this topic thread whenever he deems necessary.
This includes the addition of a new Uranium stock pick the Munchkin Man wants to add to his list.
This also includes the deletion of any Uranium stock, which is currently on the Munchkin Man's list, which the Munchkin Man deems as no longer worthy.
During a time when new Uranium stocks are sprouting up like mushrooms, the Munchkin Man believes that it is more important, then ever before, to be as selective as possible.
In additon, the Munchkin Man invites anybody, who is interested, to participate in this thread by recommending any Uranium stock picks of your own.
Furthermore, please feel free to disagree with the Munchkin Man at any time.
By exposing you to as many different ideas as possible, the Munchkin Man believes that you will be better equipped, and have much greater odds, to construct a profitable and successful Uranium stock portfolio of your very own.
Good luck to all.
Best Wishes,
Munchkin Man
18. A Uranium Stock Update
Hombre Munchkin| 07-04-06 | 04:54 PM
Greetings To All:
The Munchkin Man has an important update to report for this information thread.
In Post #2 of this thread, which corresponds to Part Three of this primer, the Munchkin Man provided the following name and ticker symbol to one of his recommended junior explorer Uranium stock picks:
_________________________________
Volcanic Metals Exploration Inc.
VME.V = VMEVF.PK
_________________________________
The Munchkin Man needs to make the following announcement.
The name of this company and the ticker symbols of its stock have now changed.
The new name of the company is:
Energy Fuels Inc.
The new ticker symbols are:
EFR.V = EFRFF.PK
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This important information has been brought to you by the Munchkin Man.
Good luck to all.
Best Wishes,
Munchkin Man |
