Fronteer Development Group (FRG)
(3/12/07)

We're looking at Canadian mining and exploration company FRG as a play on uranium, which has been red hot (no pun intended).  The company also has holdings in gold, although uranium is in a much more powerful bull market, and unless you happen to be a spot trader in uranium, stocks for the moment are the best way to play the sector.

Per our wave model, FRG has been tracing out a bull pattern since 2005 that, relatively speaking, is still getting underway.  While there may be great upside potential for the stock, our initial play is still a bit conservative.  That could be revised according to how things develop.  For the present, we're looking for a move to a 16.15 profit target.  The stock appears to have completed a fourth wave zigzag at 10.29, and the bounce from that low suggests the first subwaves of a new Wave 5 are developing.  It's possible a small internal second wave pullback remains, and our suggested entry would be on a break through 12.50, with 10 as a suggested stoploss.  It's earlier 13.65 high should be considered resistance.

For an option play, we like the September 2007 $12.50 Call (symbol FRGIV), currently selling for $2.45 with a nice Delta of 0.61.  

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