Most investors read a company's news releases, but don't read between the lines to understand in which direction the company is heading. Too often, a company tries to say everything in the headline and the first paragraph. Why? Because they know, as we do, that most investors scan the headline, a few sentences and perhaps look at some drill intercepts or key technical data (which few really understand). Then, the investor looks at how the share price reacts to the news, rejoicing or complaining on a stock chat board. Often, key phrases or sentences are buried inside the release, sometimes near the bottom. These may give you a clue as to what is really happening with the company.
We pulled up some recent news releases of several uranium companies we have been following to help investors read between the lines. Only a keen, ruthless appraisal of each news release, or a series of their news releases, could give you an accurate interpretation of how well the company is doing. Hopefully, the guidance which follows may help you better understand what is really going with a company's plans.
Two companies on the move serve as our next example. Energy Metals Corporation (TSX: EMC.TO) announced it would commence trading on the Toronto Stock Exchange on Thursday. EMC Chief Executive Paul Matysek's quote spelled it out, that because of this it would be possible for "… the Company to reach a broader base of individual investors, mutual funds and institutional investors." In other words, there would be less dependence upon the retail investor, and more reliance on the big funds to pile into EMC shares. Of course, the little guy will join the party as well.
Uranerz Energy (OTC BB: URNZ) issued a few telling news releases, which may explain the direction in which they are heading. On June 5th, the company announced a new Chief Financial Officer. URNZ also announced it had closed a financing, bumping up their cash to just under $12 million. URNZ Chief Executive Glenn Catchpole told us he hoped to launch his first In Situ Recovery operation for about, or less than, $10 million. This is a good sign. But, it was the next day's news release which confirmed the earlier news and reinforced where the company is going. The company announced the appointment of three independent directors to its Board. All three were appointed to the audit committee. Two are accountants with impressive track records; the third has an MBA from the University of Western Ontario, one of North America's top MBA schools. How do we interpret this news release? URNZ probably plans to move from the lowly over the counter bulletin board to a more senior exchange: Amex or NASDAQ Small Cap would be our guess.
Sometimes, when there is a lack of news, one can learn to dig around and find a company can be doing quite well. In other instances, one can study the news releases and try piecing together where the company is heading. We hope this guidance helps you become a more sophisticated investor. We neither recommend stocks nor give buying and selling advice. As always, speculating on natural resource companies can be very risky and suitable only for certain investors. One should always check with their registered financial advisor about what is suitable or not for one's investment decisions.
James Finch contributes to StockInterview.com and other publications. Sign up now and get your free copy of our new book, "Investing in the Great Uranium Bull Market: A Practical Investor's Guide to Uranium Stocks." Just visit http://www.stockinterview.com for details.
