Sep 27 2008
Can Denison turn around?
Back when I was a little less wise, I invested at the bidding of one financial guru who was excited about Denison Mines (DNN) I picked it up-nay all the investors in my family picked it up- at 7 and sold out at 11. Today it is at $3.60/share and I am wondering what I was doing buying into that when it wasn’t even putting out a net profit! That just goes to show you that I, too, can have a “What was I thinking?” moment.
But what I am thinking about now is how much better DNN looks now. First, uranium is bottoming out, and the stock is at a P/E of 17. The company is looking to expand its vanadium products and is using as many diversified products and services as it can to remain competitive and financially lucrative. Plus, its bottom line, its net profit has soared from nothing discernable in 2006 to $47 million in 2007. Now THAT gets my attention.
So what to do? Buy? Not yet. We are watching just as we did when TELOZ was approaching the bottom. I like to give a bit of warning on this so you can search it through as well. I figure if something comes up that is ugly, someone smart should mention it.
I look at Denison as a takeover or buyout. Billiton is always looking for something good to buy out; it only stands to reason that DNN and some other entity would marry. The fast and furious buyout stage in gold producers has sort of come to a halt, but hopefully when lenders’ purse strings loosen, these mergers will get together and liven things up. In the meantime, I’ll watch for a time to pull the trigger and get back to you on it.
