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Sometimes the market does things that just don’t make sense.
I’m sitting on a call spread in Centrus Energy (LEU) — the $63-$65 spread — and it’s up 70%.
Not bad, right? But while I’m riding this winner, the stock itself is getting hammered.
And I can’t figure out why.
LEU has a $900 million Department of Energy contract, and a $3.8 billion backlog.
These aren’t small numbers — this is a real company with real contracts.
So why the sell-off?
Sure, they missed earnings a little bit, but the fundamentals and government backing haven’t changed.
The contracts are still on the books, and I believe nuclear will only become more important.
The Broader Nuclear Picture
LEU is acting differently than the rest of the nuclear sector.
The Atomic Energy (HEAT) has corrected back a little, but it’s not bad.
The Global X Uranium ETF (URA) has pulled back some too, but it’s still holding up just fine.
LEU is down while the broader nuclear space maintains support, which makes no sense to me.
I think this is “profit-taking,” and the stock is going to turn back around soon.
It reminds me of when gold dumped $1,000 before ripping back above $5,100.
I think these nuclear plays are doing the same thing — a shakeout before the trend resumes.
My Game Plan From Here
I’m riding this spread some more instead of locking in that 70% gain right now.
When a company has this kind of backing and backlog, you don’t panic over a minor earnings miss.
You let the market sort itself out and stick with companies that have actual business.
LEU fits that bill, even if the price action doesn’t reflect it right now.
Sometimes you’ve just got to trust the fundamentals and let the noise settle.
Geof Smith
Geof Smith Trading
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