Penny Stock To Watch: USEC, Inc. NYSE: USU

2011 was an absolutely terrible year, to say the least, for uranium and uranium miners like USEC, Inc. (NYSE: USU) which was down 78.57% for the year. Most uranium mining equities were down as much as 80% for the calendar year 2011.

First was the Japan nuclear catastrophe followed by Germany’s indication that it was going to seek alternative energy sources aggressively and reduce its use of nuclear power all while Iran stood strong on its intent enrich its nuclear program.

Once 2012 started, quite a lot of these equities have started 2012 looking for retaliation for their shareholders. Several have gained back some of their market share which may be an indication that the uranium miners bottomed in Q4 of 2011 and are due the attention they deserve. In addition, recent remarks from Chinese Prime Minister, Wen Jaibao have highlighted the country’s intentions to focus on nuclear energy and limit its use of coal.

USEC a leading world supplier of nuclear fuel and advanced technology solutions.  USEC operates the only U.S.-owned uranium enrichment facility in the United States. Thanks in part to the Cold-War; USEC is the world’s most successful nonproliferation program recycles bomb-grade uranium from dismantled Russian nuclear warheads into fuel used to power America’s nuclear reactors.

USEC’s subsidiary, NAC International, performs a variety of contract work for the U.S. Department of Energy (DOE) and the U.S. Nuclear Regulatory Commission. These contracts include:

  • Supply of design development services to the DOE for its Transportation, Aging, and Disposal (TAD) canister system.
  • Prime contractor for several major government design, engineering and fabrication programs, including at Hanford (Washington), Savannah River and Oak Ridge.
  • Specialized cask services for the DOE, including design of a unique transport cask for Californium and support for recertification of the Paducah Tiger UF6 transport over pack, including drop test analysis.

USEC’s stock is traded under the symbol USU on the New York Stock Exchange (NYSE) and has 1,917 listed full time employees.


Company Snapshot:

Trading Symbol: NYSE: USU
Last Price: $1.80
Avg Vol (3 month): 1,876,700
Avg Vol (10 day): 2,324,710
Market Cap: 219.58M
EBITDA (ttm)6: 4.80M
Total Cash (mrq): $117.90M
Shares Outstanding: 121.99 million shares
Shares Short (1/13/12): 18.90 million shares
Shares Held by Insiders: 12.50%
Insider Purchases (Last): 10,000 shares @ $3.959
William Lance Wright, Officer
May 26, 2011
Insider Sales (Last): 2,078 shares @ $1.80
Christine Ciccone, Officer
September 24, 2011
Institutions Holding Shares: 125
Top Institutional Holder: 8,708,280 shares
Dimensional Fund Advisors, LP
(as of 9/30/2011)
Top Mutual Fund Holder: 3,522,849 shares
Global X Funds: Glbl X Uranium ETF
(as of 11/30/2011)
Contact Information: Two Democracy Center
6903 Rockledge Drive
Bethesda, MD 20817
Investor/Analyst inquiries: Steven Wingfield
Phone: 301-564-3354
Next Earnings Date:  February 20, 2012
Profit Margin (ttm) -1.90%
Operating Margin(ttm): -2.22%
Return On Assets(ttm): -0.67%
Return On Equity(ttm): -2.65%
Qtrly Revenue Growth (yoy): -33.70%
Operating Cash Flow(ttm): $99.70M
Levered Free Cash Flow(ttm): $-85.50M

USU closing price for the week that ended Friday, January 27, 2012 was $1.80, up 10.43%, on volume of 4,266,076.
USU is trading 37.69% above its 50 day moving average and -4.67% below its 200 day moving average.
USU is -70.49% below its 52-week high of $6.10 and 66.67% above its 52-week low of $1.08.

USEC’s Governance Risk Indicator (GRI®) as of Jan 1, 2012 is:

  • Audit (Low Concern)
  • Board (Low Concern)
  • Compensation (Medium Concern)
  • Shareholder Rights (Medium Concern)

Long Term Forecast:

It seems inevitable that uranium demand from new and sizable locations such as China and India, among other wealthy Asian nations that may announce similar initiatives, will begin to outpace uranium supply, possibly creating dramatic shortages and price spikes to both uranium and the shares of uranium producers.

USEC also continues to work on the American Centrifuge project and that USEC and the Department of Energy have identified a path to provide interim funding for the initial phase of a research, development and demonstration (RD&D) program for the project. This path would provide the basis for funding of the RD&D program activities through the end of March, 2012.

In the meantime, USEC will continue to work with DOE and Congress to secure funding to complete the RD&D program. The $300 million RD&D program proposed by DOE will enhance the technical and financial readiness of the centrifuge technology for commercialization. The RD&D program is expected to involve manufacturing and operating additional production-design machines so that key systems can be tested as they would actually operate at the scale necessary for full commercialization.

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