Good! RBC finally out of UUU...They'll be buying back in when the price is around 4.00 - dummies!
Overweight uranium and fertilizer, underweight base metals
Mininganalysts at RBC Capital Markets continue to recommend an overweightposition in uranium and fertilizer stocks, a market weight position inprecious metal stocks, and an underweight of bulk commodities and basemetals stocks.
The global team updated its 20 Best Ideasportfolio with seven new names but left the recommended weightings forthe third quarter unchanged, saying we remain in the early part of aglobal economic recovery.
The analysts are taking profits inThompson Creek Metals Co. Inc., Peabody Energy Corp. and UR EnergyInc., while reducing exposure to South Africa and the stronger rand byremoving DRDGOLD Ltd. and Eastern Platinum Ltd. They also switched outof IAMGOLD Corp. and Uranium One Inc. in favour of lower risk names.
RBCis adding BHP Billiton Ltd., Energy Resources of Australia Ltd.,Uranium Participation Corp., Kinross Gold Corp. and Intrepid PotashInc. as lower risk investments given their trading liquidity andfinancial strength. Sherritt International Corp. gets the call for itsnickel and energy exposure, while Neo Material Technologies Inc. is aplay on rare earth elements in China.
The analysts expect theuranium spot price will continue to rebound as production cuts from2008 impact supply and Asian power utilities look for long-termcontracts. They also expect the recent indications for Indian potashprice settlements to have positive implications for both ongoingnegotiations in southeast Asia and the equities.
As forprecious metals stocks, RBC anticipates that the gold price will riseas Indian demand rebounds in August through September. They would buyshares on near-term weakness as a result.
While base metalsperformed well in the second quarter, partly as a result of strategicbuying from China, the analysts feel equities are reflecting mid-cyclevaluations and remain risky given the weak global economy. They alsosee no near-term positive catalysts for bulk commodity prices.