USEC Inc. (USU) up 13% since Monday

The Masters talked up USEC Inc.  (Public, NYSE:USU) on April 17th: Investing in Uranium with USEC Inc. (USU).  The stock was ready to fall then, and it did after Q1 profit dropped.  But now investors are picking up shares and realizing that USEC is worth looking into in the $5 range.

Even with the fall in shares, USU is up 7% since the Masters pointed out 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). We spotted them after USEC Inc. commented 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.

Let's review the Q1 numbers that came out late last month, because as it turns out, they were right it line with expecations:

The company reported net income of $4.4 million, or 4 cents per share, for the quarter. That compares to a net income of $39.3 million, or 45 cents per share, for the same quarter in 2007. The 2007 figures, however, saw a large benefit from $16.9 million in a non-cash reversal of previously recorded tax accrual and interest.

USEC did reiterate its previous earnings and cash flow guidance for the year, indicating an expected total revenue for the year of between $1.7 billion and $1.78 billion with a gross profit margin of between 13 and 14 percent.

Here's more of what the company had to say:

According to USEC Inc., the 2008 numbers reflect an anticipated decline in separative work unit (SWU) volume required by customers. "A majority of reactors served by USEC are refueled on an 18- to 24-month cycle, and our guidance for 2008 anticipates a 15 to 20 percent decline in SWU sales volume that reflects the high number of reactors refueled in 2007," indicates the earnings report from USEC Inc. "We expect SWU sales volume in 2009 to return to levels seen in 2007 as these reactors are refueled again.

"In addition, we expect the average SWU price billed to customers in the full year 2008 to be slightly higher than in 2007. Therefore, short-term comparisons of USEC's financial results are not necessarily indicative of longer-term results."

The SWU decrease, according to the company, played a large role in a 26 percent decline in revenue for the quarter, which came in at $343.3 million.

Masters, with all the attention on rising energy prices, a little uranium in your back pocket may be what your portfolio needs.  Despite what the tree huggers may say and think, nuclear power is better all around than powering the U.S. by coal. The French have had great success and its on the agenda of all three U.S. presidential candidates as they seek to diversify the country's energy mix and reduce dependence on foreign oil. Over the long-term, USU is trading near all time lows:

Discliamer: The Author has a long position in USU.

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