Making Hay Monday - June 30th, 2025
Taking Stock...
“Trading between 16x and 17x earnings, the Small and Midcap spaces represent an interesting opportunity. If the expected optimistic scenario unfolds, then the rally should broaden and significantly lift the less liquid small and midcap groups. If the economic slowing materializes, the valuation discount of the small and midcap names should offer some downside protection.” -Jones Trading’s Mike O’Rourke
“People had become bullish on oil for all the wrong reasons.” -Cornerstone Analytics, Mike Rothman, referring to the price spike by crude when Israel and America attacked Iran
Taking Stock (And Commodities, Too)
Regular Haymaker readers should be aware that commodities have been a favored subject of this newsletter over the last couple of years. We’ve tried to be opportunistic in our recommendations of both the physical commodities – such as gold, silver, oil, natural gas, uranium, and palladium, among others – and the stocks of the related producers of same. Frankly, most investors have long had an attitude toward hard assets akin to the old Borscht Belt joke about marriage: “Now, take my wife… please!”
That jaundiced view has dominated when commodities have languished, as so many have done in recent years, and/or corrected hard after powerful run-ups. For example, uranium was a terrific performer in 2023 before it was taken to the woodshed in 2024 and into the first few months of this year. After basically doubling from the start of 2023 into January 2024, it was sliced in half by early April of this year. The essential nuclear feedstock, which seemed to have most of the financial world beating a path to its door as 2024 began, had been largely ghosted just three months ago. This was despite an exceptional fundamental set-up of vaulting demand and chronically challenged supply, as was repeatedly pointed out in these pages.
Since then, uranium has rediscovered its mojo, or at least investors have regained their senses about the strength of the bullish case for U308 (the type of nuclear material actually held by its main ETF, the Sprott Physical Uranium Trust, SRUUF). With it now up 50% from its April trough, I continue to feel a bit of paring back is in order, as previously expressed.
We also gave a qualified plug for the junior uranium miner ETF, URNJ, last September. It’s done OK, bouncing about 17%, but it would have been a stellar performer for those who bought more on weakness, especially in late March/early April. Fortunately, that was when it was added to our ETF Growth Portfolio model.
Selling into robust rallies is a discipline I’ve long used when a commodity has popped considerably in a short timeframe. Accordingly, I reduced my SRUUF position in my IRA by about 30% late last week. However, I’m retaining the bulk of my holdings in expectation of much higher prices. Commodities are, and have always been, extremely volatile. No bull market goes up in a straight line and I don’t expect even uranium to be an exception, notwithstanding its outstanding supply/demand dynamics.