💼 Inside the Portfolio: Updates from our Swing Trading Desk

08 Jan 2025 - Insights, adjustments, and forecasts about our latest swing trades 💹

Position Updates:

• ZIM Integrated Shipping Services Ltd. (ZIM): Taking a prudent approach to risk management, we reduced our exposure by selling 50% of the position, locking in a 10% gain. This strategic move aligns with our defensive stance in the current market environment, allowing us to protect profits while maintaining some exposure to potential upside.

• TSSI (TSS Inc.): In line with our risk management strategy, we trimmed 30% of our position, capturing an impressive gain of over 50%. This partial profit-taking reflects our disciplined approach to portfolio management, especially given the market's current technical signals.

• Centrus Energy Corp. (LEU): We closed our entire position for a 10% gain. While the position had shown stronger profits earlier, market conditions prompted a defensive exit. Though we initially anticipated a longer holding period, protecting gains in the current environment took precedence over attempting to capture additional upside.

New Positions and Subscriber Insights:

We initiated a defensive position yesterday, taking a measured approach with a starter position given the current market dynamics. We anticipate potential opportunities to increase our exposure in the coming weeks, maintaining flexibility to adjust according to market conditions.

Our cautious approach reflects the current market environment, where we're prioritizing capital preservation while remaining prepared for opportunities.

As always, entry points and specific details for these new positions were communicated in real time to our paid subscribers through our premium alert system via chat, ensuring they had the opportunity to execute trades promptly.

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1. Centrus Energy Corp (LEU)

Centrus Energy Corp. supplies nuclear fuel and services for the nuclear power industry in the United States, Japan, Belgium, and internationally. The company operates through two segments, Low-Enriched Uranium (LEU) and Technical Solutions. The LEU segment sells separative work units (SWU) components of LEU; SWU and natural uranium components of LEU; and natural uranium for utilities that operate nuclear power plants. The Technical Solutions segment offers technical, manufacturing, engineering, procurement, construction, and operations services to public and private sector customers, including the American Centrifuge engineering and testing activities. The company was formerly known as USEC Inc. and changed its name to Centrus Energy Corp. in September 2014. Centrus Energy Corp. was incorporated in 1998 and is headquartered in Bethesda, Maryland.

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Fundamental Analysis

Key Catalysts and Market Dynamics:

• Strategic Positioning in the Nuclear Industry:
  Centrus Energy Corp. is uniquely positioned as the only American-owned company capable of producing high-assay, low-enriched uranium (HALEU) using U.S. technology. This specialized uranium is critical for both existing nuclear reactors and the next generation of advanced reactors, including Small Modular Reactors (SMRs). With partnerships already in place with companies like Oklo (OKLO) and TerraPower (private), Centrus Energy is poised to become the go-to supplier for U.S.-based enriched uranium.

• Massive Competitive Advantage:
  While there is a peer that may enter the market if permits are approved, Centrus Energy currently holds a significant competitive edge. As the only company capable of supplying the U.S. government with low-enriched uranium for national security purposes, Centrus is in a league of its own. Furthermore, as SMRs come online in 2027 and 2028, they will likely be required to source their HALEU from a U.S.-based supplier, further solidifying Centrus' dominance in the market.

• Nuclear Power's Resurgence:
  After decades of skepticism following high-profile nuclear accidents, nuclear power is experiencing a renaissance. Nuclear energy is back in focus with better safety practices, increasing energy demands driven by AI and automation, and the urgent need for clean, sustainable power. Centrus Energy, as a key distributor of enriched uranium, is well-positioned to capitalize on this renewed interest in nuclear power.

Earnings Results:

• Revenue Growth: Total revenue increased by $6.4 million year-over-year, primarily due to the HALEU Operation Contract.

• Gross Profit: Gross profit for Q3 2024 was $8.9 million, down from $11.3 million in Q3 2023, reflecting lower sales volume in the LEU segment.

• Cash Position: As of September 30, 2024, Centrus maintains a strong cash balance of $194.3 million, providing financial stability to support future growth initiatives.

• Backlog: The company’s backlog stands at $3.8 billion, extending through 2040, with $2.8 billion in the LEU segment and $0.9 billion in the Technical Solutions segment.

Centrus Energy is actively producing HALEU at its American Centrifuge Plant in Piketon, Ohio, under a contract with the DOE. The company has already delivered 332 kilograms of HALEU to the DOE and recently secured two critical awards for HALEU production and deconversion contracts. These contracts, backed by over $3.4 billion in Congressional appropriations, position Centrus as a key player in restoring America’s uranium enrichment capabilities.

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Technical Analysis

• Entry Point: The stock has broken its daily downtrend line, which has been in place since the beginning of November. Furthermore, yesterday, the market for nuclear and clean energy stocks showed notable relative strength.

• Support and Resistance Levels: Support is currently established at $65.00 on the daily chart. The first resistance level is at $92.00 on the daily, then $119.00

• Additional Notes: None.

Entry Day: 02 January

Price: $70.71

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