Investing in Uranium with USEC Inc. (USU)

There's only one uranium enrichment facility in the United States: a gaseous diffusion plant in Paducah, Kentucky.  The guys that run it?  Not Homer Simpson, it's USEC Inc.  (Public, NYSE:USU) and their shares trade for under $5. Today they are getting all kinds of attention with their $3.5 billion plant and trying to get the U.S. to help pay for it.

USEC Inc. commented today on its financing for the AC100 centrifuge machine plant construction, saying it's reviewing the plans in light of current credit market conditions.

'Our preferred path is to obtain a loan guarantee for the project from DOE (Department of Energy),' said John Welch, the company's president and chief executive officer.

Welch continued: 'In late 2007, Congress authorized DOE loan guarantees for a variety of energy projects, including up to $2 billion for the front end of the nuclear fuel cycle. The DOE's implementation plan went to Congress last week and DOE expects to issue a solicitation for projects by midyear.'

Fellow Masters, before you get excited about buying USEC Inc. (USU), take a look at their stock's 52-week performance:

The stock has fallen like a rock, but last Tuesday (8/7) Jefferies & Co. Inc. analyst Laurence Alexander said in a client note that he expected the company to post full-year 2008 earnings per share of 25 cents, up from his previous estimate of 20 cents.

Analysts polled by Thomson Financial expect, on average, full year earnings per share of 30 cents. He also raised his 2009 earnings per share estimate to 65 cents from 50 cents. Analysts expect earnings per share for 2009 of 70 cents.

"Rising uranium ... prices and elevated energy prices provide an attractive backdrop for operational improvements at USEC, particularly given conservative Street expectations on competitor behavior and project execution," Alexander wrote.

The analyst has an $11 price target and a "Buy" rating.

Other analysts have positive outlooks for USEC. Natixis Bleichroeder Inc. analyst Mark Manley has a $10 price target and a "Buy" rating on the stock.

Considering the analyst view, the only U.S. uranium play, and the beat up stock price, USU could prove to be a decent investment at this point in time.  If they don't get the DOE support, the stock is hitting a new 52-week low again, but if they do?  Well, the choice is yours (enter Black Sheep's intro).

SOURCE: Forbes.com

Disclaimer: The Author has a long position in USU.