Uranium Stocks Are Climbing: See Which Are Best To Buy
The demand for cleaner fuel alternatives is on the rise. As one of the world’s most abundant metals, uranium is a popular choice. A single pellet of uranium produces the same amount of electricity as:
One ton of coal
Three barrels of oil
17,000 cubic feet of natural gas
Uses for Uranium
Once uranium is depleted for energy use, it’s reusable for other applications since it’s less radioactive. Ships use it for counterweights, and it also has applications in ammunition and armor.
Transition to Nuclear Power
In 2020, the U.S. government began to invest heavily in uranium mining, contributing to an uptick in the stock market. Uranium fuels nuclear power, which represents approximately 20% of America’s energy and 10% of the world’s electricity. And its use is growing. About 50 new reactors are under construction in countries that include China, India, Russia and the United Arab Emirates, with completion dates ranging from 2021 to 2027.
All told, about 445 nuclear power reactors are operating and 300 more are proposed, mainly in Asian nations, where electricity demand is increasing quickly.
While the U.S. and the U.K. are currently leading the way in nuclear energy, China is projected to be the largest market in the world for uranium. The Chinese government set a goal to have nuclear energy contribute 10% to the country’s overall energy by the year 2030 — the same year it expects carbon emissions to peak.
Electricity Demand
Electricity use is impacting uranium demand in two distinct ways:
The use of electricity is considered one of the greatest signs of a strong economy for nations around the world. The strength of the world economy contributes a lot to demand in the stock market in general.
Uranium is trending as a way to fuel electricity. In turn, the rise in electricity use is fueling the demand for nuclear power and uranium. Investors see the demand for a product or service as a sign to invest for the potential to earn a profit.
Investing in Uranium Stock
The two top U.S. uranium producers are up an average of about 95% since January:
Energy Fuels Inc. (NYSE American: UUUU)
Ur-Energy Inc. (NYSE American: URG)
Other uranium miners have seen even larger gains in the same period:
Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF): 259%
Fission Uranium Corp. (TSX: FCU | OTCQX: FCUUF): 143%
Here’s what experts say about why uranium stock is rising:
When you’re deciding on adding a stock to your portfolio, consider this ratio: Available stocks include 70% big-company stocks, 20% midsize stocks and 10% small stocks. If you have your eye on a uranium company, where does it fit into your portfolio?
Which Uranium Stocks Are Worth the Investment?
The best uranium stocks are identified because of their:
Capacity to meet anticipated demands in the industry
Investor interest
Increase in price over the last year
Stock | September 8, 2020 | September 20, 2021 |
|---|---|---|
Cameco (CCJ) | $10.55 | $21.31 |
Energy Fuels (UUUU) | $1.70 | $6.77 |
Uranium Energy (UEC) | $1.03 | $2.99 |
Ur-Energy (URG) | $0.53 | $1.69 |
1. Cameco Corporation (NYSE: CCJ)
Cameco Corporation operates worldwide in the production and sale of uranium. Founded in 1987, it’s one of the largest companies in the market today. Despite a somewhat disappointing second quarter in which the company missed revenue and earnings-per-share estimates, Cameco shares surged 24% the last week in August on the news that RBC Capital and GLJ Research had raised their price targets from $14 to $21 and from $21 to $30, respectively.
Earlier this year, Cameco announced it would reopen its Cigar Lake uranium mine, which was expected to help ease supply chain issues. The company closed the mine in December 2020 due to the pandemic.
Cameco provides 9% of the world’s uranium product. It’s a great option for investing since it has long-term contracts. This protects the company from fluctuations in pricing.
2. Energy Fuels (NYSEMKT: UUUU)
Although Energy Fuels was once a leader in the U.S. uranium mining market, other companies have risen to the forefront. Still, Energy Fuels has remained a steady competitor, with milling operations in Utah and mining and exploration operations through the southwestern U.S.
According to its Q2 earnings report, Energy Fuels is ready to meet increasing demand, with several existing uranium mines on standby and a significant ready supply of company-produced uranium of U.S. origin.
The company has shown solid growth potential this year, announcing early in 2021 that it was expanding into rare earth metals. In addition, Energy Fuels announced in August that it had signed an alliance with RadTran to study the recovery of thorium and radium in the hope of developing isotopes for cancer treatment. By diversifying projects, the company shows that it’s growing and diversifying, which could minimize the impact of the uranium market on profit margins.
3. Uranium Energy Corp. (NYSE: UEC)
Uranium Energy Corp. is a uranium mining and exploration company that currently operates in the southwestern U.S. Its properties are primarily located in:
Texas
Wyoming
New Mexico
Arizona
Colorado
Uranium Energy represents one of the largest catalogs of uranium exploration in the U.S. It primarily operates in assessing possible acquisitions where miners determine that uranium is found.
Although technically a penny stock currently trading at $3.13, this company shows good investment potential for investors willing to risk it because of its impressive presence in the U.S. market. It has a market cap of nearly $700 million, and the stock is up 300% year to date as of Sept. 7, with steady increases since November 2020.
4. Ur-Energy Inc. (NYSE: URG)
Based in south-central Wyoming, Ur-Energy is a relatively new company that’s smaller than other uranium companies. Don’t let its size fool you, because Ur-Energy has a 2 million pound-per-year capacity for uranium.
It has a market cap of $340.33 million. One reason to watch Ur-Energy is that analysts expect revenue growth to triple in the next year, and they predict the stock could rise over 40%.
How To Choose an Investment Wisely
Weigh the pros and cons of each investment option. Think about your long-term goals and what your tolerance is for risk. Things to take into consideration include:
The current price for a single share
The company’s trends in growth
Overall size of the company compared to its peers
Trends in dividend payouts to investors
Even though you should assess a company’s historical trends, keep in mind that past performance isn’t an indicator of future results.
Katy Hebebrand contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: Uranium Stocks Are Climbing: See Which Are Best To Buy
