Denison Beaten Down to a 52 Week Low

Denison Mines hit an all-time low on its american traded shares DNN (Amex) and was just six cents off of a near five year low on their Canadian traded shares DML (TSX). Following the American traded DNN, the shares 52 week range is a low of $1.87 on yesterdays close to an adjusted high of $8.86.

Here is a chart outlining the America side decline since inception. Do keep in mind that this chart does not take into account the semi-recent split.

When searching the TSX and Yahoo Finance Denison has not released any news since September 18th. This stock, while having no problem dropping on its own of late, is one of many metal plays swept up in the recent sector downtrend.

With no free cash flow, a negative ROIC (return on invested capital) and shrinking margins it is difficult to get behind Denison. It will be interesting to see if these shares can bounce back when (maybe if) the markets begin to improve.

Options traders do remain relatively optimistic, with 2.50 strike levels trading at around the $0.80 level for April 2009 contracts.

As with all uranium stocks Denison has been been a roller coaster ride over the course of the past twelve months. With spot prices continuing to drop ($57 as of this writing) we’re beginning to see a smoothing out of the uranium stocks traded on the TSX.

Denison is currently right at their 50 day moving average, which I’ve unfortunately obscured. On the chart you can see that past overhead resistance, which has since been broken through, now has a chance at becoming the short-term support level at around $7.50. We’ll see in the coming weeks market action if this is the case or a false start for Denison.

Denison DNP 50 Day Moving Average and Support Chart (Six Month)