Uranium Pick from Stock Trading Robot

Company: Vanguard Minerals Corporation (VNGM.OB)
Yahoo Finance: http://finance.yahoo.com/q?s=VNGM.OB
Company Websites: http://www.vanguardminerals.com/

Last night I told you I had found a "hot topic" stock that
was flying under the radar of most investors...

And for those who didn't read that email, I mean... Marl found
a stock that is massively undervalued... even though it trades
in an industry where companies usually have extremely high
stock prices.

And there is usually just one reason companies are undervalued.
And that is... They have poor growth prospects, and so wall
street investors forget about them like an unwanted step son.

On the other hand, when these wall street types find a exciting
company... (usually in the hot topic of the moment)... it will
be bought up and up until the price bares little resemblance
to the companies real value.

A great example of this is Apple and Google, whom are both
companies which are massively overvalued by investors.

And this is mainly because of the perceived worth of their
brand, and the high profile these companies have.

So it goes hand in hand... that the price of a stock is often
dependent not on the companies performance but mainly on whether
the company operates in an industry that is a "cocktail party
topic"... at that point.

Can you remember when Google floated, not so long ago? It was
featured on the news, and everyone (not just investors) was
talking about it...

That kind of high profile coverage took the stock from its
floated level of $30/share to the crazily high $747.24 per share.

Whereas companies whom operate in "boring" industries, such as
funeral services are often priced at such low levels, an investor
could buy over 50% and simply liquidate all assets and make
a profit.

And what does this have to do with VNGM?

Glad you asked... You' see VNGM.OB is a Uranium mining company,
or a stock that operates in one of these hot industries that
everyone seems to be talking about.

Almost every day we seem to hear about global warming, and new
fangled forms of green energy.

And so it goes without saying, that stock prices in this
industry are usually extremely high...

And I often won't even analyze companies in this industry. As
99% of them are already valued based on their growth prospects...

And that's an unfair method of valuation... it wipes out
potential profit as the investor has already paid too high
a price.

So when I found a company (in this industry) that based on
analysis shows to be extremely undervalued... I began to get
very excited.

VNGM.OB is priced at a level that represents true value, and this
is attached to a company that has growth prospects usually
only associated with stocks of much higher prices.

Let me tell you a little about the "hot" area this company
operates in...

Over 50% of the Uranium produced from mines comes from Canada
(28% of world supply), and Australia (23%). Other major
producing countries include Kazakhstan, Russia and Namibia.

The world's largest undeveloped, high-grade uranium deposit
today is Cigar Lake in Saskatchewan. Cigar Lake, operated by
Cameco Corp. holds 232 million pounds of Uranium at a grade of 19%.

Production from Cigar Lake was scheduled to begin in early 2008.
At its peak, Cigar Lake was supposed to provide 17% of world's
uranium supply. But now the future of the mine is in doubt.

In October 2006, Cameco announced that Cigar Lake had sprung a
leak and the underground workings are now completely flooded.
From what I hear, the mine may be lost completely. At any rate,
Cameco recently reported that production won't start back up
for another three years.

News of the flood pushed uranium prices 6.6% higher in October,
from $56 a pound to $60. The increase was the largest weekly
gain in 20 years. But since then, the energy metal has already
doubled to over $120/lb!

About 16% of the world's electricity came from 440 nuclear
reactors last year. This figure is constantly growing. Right
now there are 29 reactors under construction around the world
and another 66 being planned. Japan alone intends to add 11
more by the year 2010 and China hopes to add 24 to 30 by 2020.

So right off the bat we know that demand for the radioactive
metal is set to increase just because of the growth in nuclear
power generation. (The more Nuclear Power Stations are built the
more Uranium they demand).

... And demand for Uranium is very easy to accurately forecast.

The cost structure of a nuclear power plant, means that the
main cost is that of building the plant. Operating the plant is
relatively cheap and so...

It is very cost effective for a plant to keep running at high
capacity all the time. And in fact it is rare that you'll be
able to find a Nuclear power plant (in operation) that is not
operating at the time of your visit.

And so the demand forecast for Uranium largely depends on the
number of plants over the country... Regardless of economic
conditions.

So the more plants that are being built, means there is more
demand for Uranium... And consequently it will rise to a higher
price.

Now get this...

Production from the world's uranium mines now supplies only
about 60% of the requirements of the world's nuclear power
utilities leaving a wide gap between production and demand.

The shortfall has been made up largely from government stockpiles
and recycled nuclear weapons. But these supplies are currently
running thin and certainly won't last very much longer.

The supply-demand balance for uranium is tighter than any other
major commodity. And the flooding at Cigar Lake didn't help.

With a global building boom for nuclear power plants underway,
demand for uranium is only going to rise. With rising demand
will come increased prices.

Simply put, investing in uranium is a "no-brainer." Uranium
prices are almost guaranteed to continue increasing in value...

...In fact industry experts, strongly agree on this. As it is
one of the easiest commodities to forecast (price wise).

But I also told you in yesterdays email that I don't think
investing in Uranium (as a commodity) is a good idea.

You' see over the years, stocks have provided (on average) far
better returns than any commodity.

And smart investors realize that the best way to invest in a
commodity is to do it indirectly. By investing in a company
that is directly affected by the price of that commodity.

This is because you can give yourself an extra edge over most
investors, by pairing up a strong company with a direct link
to a strong commodity investors can give themselves a very low
downside risk with huge upside potential.

(i.e. The business could be sold, at the height of the Uranium
bull market... And the full and total profit would be realized)

So why is this company so undervalued?

VNGM is a very new stock... And new stocks are where the best
opportunities to get in early come from.

And VNGM is a uranium exploration firm whom base their operations
in Saskatchewan where high-grade ore can be extracted but most
importantly (and here's the reason I chose this company):

... Unlike other Uranium exploration companies this one can
extract the valuable mineral at extremely low production costs
primarily because of where they are located.

You' see the company own several large claim blocks, in a place
called Athabasca Basin. This place is renowned for its low cost
of production... and this affords the company a vital competitive
advantage...

Because Uranium is purchased solely on the price, (apart from if
the quality is inferior)...

Profit Margins are Slim...

And therefore the ability for one company to have a lower cost
base means they can charge less, and make more. In addition
they'll have more profits to invest in exploration and they'll
be able to continue operation even when times are hard.

And this company have their own "secret weapon".

One of the companies staff is a maverick of the mining industry:

His name is John Maddry, he has been in the mining industry
for 18 years... And during this time he was instrumental in
the discovery of million dollar gold deposits in Nevada and
South Carolina.

He has helped find mines which have taken companies to millions
of dollars in annual profits.

This guy is also an authority on professional geology, and is
the author of numerous acclaimed publications.

In last nights email I also told you that VNGM.OB had been flying:

"Under the Radar"

And this is absolutely true...

You' see VNGM have a management team whom are more focused
on growing and creating shareholder value, than jumping up and
down for attention...

It's no surprise that the best opportunities are often the ones
that go unnoticed.

And finding an undervalued company like this is like striking
pure gold... they are as rare as hens teeth, and by the very
point that they are undervalued means their true worth is often
hidden and hard to find in a quick analysis.

But is there anything better than an undervalued company?

Yep.

You' see I have one problem with investing in undervalued
stocks. The market can often require up to 5 years, until it
finally revalues the stock at the correct market price... where
profit can be taken.

But if you can find, an undervalued company, whom are operating
in a hot investing area (technology, bio-tech, alternative
energy etc).

... Then you have a distinct advantage.

Because these companies operate in a hot area, with a very
active investor base... they are often re-valued by the markets
much quicker.

And VNGM is even helping this process to go even faster...

You' see only recently has the management started to "shout"
about what they do, by releasing news and creating a corporate
website.

... And so the only reason I chose this stock as a value play,
was because... It is in a "hot topic" area... And so I believe
the process of the market re-evaluating it could take...

Just Two or Three Weeks!

At which point I believe the stock price could soar to its
true value of $1.80 or $1.90.

This type of stock pick, is just about my all time favorite.
Investing based on value, is like betting at cards when the
dealer tips his hand.

Why?

Because the markets always, always correct themselves. If a
company is truly undervalued, it could take months or even
years but eventually the stock price will reflect the companies
true value.

And so, I think you're really just waiting, for the inevitable
to happen. Like I said it's just like betting at cards, when the
dealer is tipping his hand your way.

One last thing I think you should know before researching VNGM.OB
is that, I nearly didn't send this pick out...

That's right. Even though this is almost definitely one of the
best opportunities I have seen this year, I almost skipped it.

Because it requires something most stock traders don't have.

... Discipline

Value investing requires...

The discipline to find a good opportunity, bet big, and hold
onto that position until the market has fully re-valued it.

If you "chicken" out you could still end up with, I believe
a 30% gain... But I strongly believe this stock will peek at
a 200%+ gain within 2 or 3 weeks.

PS. With a stock which is this promising, you are looking for a
200% gain minimum... Any less and I'd be bitterly disappointed,
because this sort of opportunity doesn't come along often...
but when it does it's where all the biggest gainers come from.

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