Uranium Stocks Are Climbing: See Which Are Best To Buy
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The demand for cleaner fuel alternatives is increasing. As one of the most abundant metals in the world, uranium is a popular choice. A single uranium pellet generates the same amount of electricity as:
- A ton of coal
- Three barrels of oil
- 17,000 cubic feet of natural gas
Use for uranium
Once uranium is used up for energy consumption, it can be reused for other applications as it is less radioactive. Ships use it as a counterweight and it is also used as ammunition armor.
Transition to nuclear energy
In 2020, the U.S. government began investing heavily in uranium mining, which helped boost the equity markets. Uranium powers nuclear energy, which accounts for roughly 10% of the world’s electricity.
With 53 other nuclear reactors under construction and 110 planned, nuclear power capacity will be increased by 45% worldwide. Of these reactors, 54 are located in China.
Good to know
While the US and UK are currently leaders in nuclear power, China is expected to be the world’s largest market for uranium. The Chinese government has set a goal that nuclear energy will contribute 10% of the country’s total energy by 2030.
Electricity consumption affects uranium needs in two different ways:
- The use of electricity is considered to be one of the greatest signs of a strong economy for nations around the world. The strength of the global economy is a major contributor to demand on the stock market in general.
- Uranium is a trend for getting electricity. The increase in electricity consumption, in turn, is driving the demand for nuclear power and uranium. Investors see the demand for a product or service as a sign to invest in the profit potential.
Investing in uranium stocks
The two largest US uranium producers have increased around 150% in the past three months:
- Energy Fuels Inc. (NYSE American: UUUU)
- Ur-Energy Inc. (NYSE American: URG)
Other uranium miners saw increases of about 70% over the past three months:
- Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF)
- Fission Uranium Corp. (TSX: FCU | OTCQX: FCUUF)
Experts say the following about why uranium inventories are increasing:
- The US currently imports 95% of its uranium. The increased demand is putting the government under pressure to produce more of its own uranium for nuclear power.
- Joe Biden’s presidential victory affects uranium stock prices as he emphasizes alternative fuels.
- Even without Biden’s victory, the demand for uranium would be high. The need for uranium spans the political spectrum because electricity is such a fundamental necessity.
- Due to many shutdowns during the COVID-19 pandemic, the demand for uranium is growing rapidly. This puts pressure on governments to fund uranium mining. It also puts pressure on miners to produce enough to meet demand.
Keep this ratio in mind when deciding to add a stock to your portfolio: the stocks available include 70% stocks in large companies, 20% in medium stocks, and 10% in small stocks. If your eye is on a uranium company, where does it fit in your portfolio?
What uranium reserves are worth the investment?
The best uranium reserves are identified based on their:
- Ability to meet expected demands in the industry
- Investor interest
- Price increase last year
|warehouse||March 31, 2020||March 19, 2021|
|Cameco (CCJ)||$ 7.64||$ 17.83|
|Energy Fuels (UUUU)||$ 1.18||$ 6.52|
|Uranium Energy (UEC)||$ 0.56||$ 2.75|
|Primordial Energy (URG)||$ 0.39||$ 1.24|
Cameco Corporation (NYSE: CCJ)
Cameco Corporation produces and sells uranium worldwide. It was founded in 1987 and is now one of the largest companies in the market. The company also showed stability during the COVID-19 pandemic. Cameco’s uranium sector contributed over 90% of gross profit.
Cameco supplies 18% of the world’s uranium product. It is a great option for investment as it has long term contracts. This protects the company from price fluctuations.
Energy Fuels (NYSEMKT: UUUU)
While Energy Fuels was once a leader in the U.S. uranium mining market, other companies have moved to the fore. Even so, Energy Fuels has remained a constant competitor.
This company was added to our list because leadership recently announced it was expanding into rare earth metals. By diversifying projects, the company shows that it is growing.
The diversification also spreads the income over a larger area, thereby minimizing the impact of the uranium market on profit margins. If the uranium market struggles, its other endeavors will continue to support the company.
Uranium Energy Corp. (NYSE: UEC)
Uranium Energy Corp. is a uranium mining and exploration company currently operating in the American Southwest. Its properties are mainly located in:
- New Mexico
Uranium Energy is one of the largest uranium exploration catalogs in the United States. It mainly evaluates possible acquisitions where miners discover uranium is found.
This company is a good investment because of its impressive presence in the US market. It has a market capitalization of $ 201.73 million.
Ur-Energy Inc. (NYSE: URG)
Based in south-central Wyoming, Ur-Energy is a relatively new company that is smaller than other uranium companies. Don’t let its size fool you, Ur-Energy has a capacity of 2 million pounds a year for uranium.
It has a market capitalization of $ 90.3 million. One reason for watching Ur-Energy is that it has posted 100% profit for four quarters in a row.
How to choose an investment wisely
Weigh the pros and cons of each investment option. Think about your long-term goals and how high your risk tolerance is. Things to consider are:
- The current price for a single share
- The company’s growth trends
- Overall size of the company compared to its competitors
- Trends in dividend payments to investors
Also, when evaluating a company’s historical trends, keep in mind that past performance is not an indicator of future results.
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About the author
Katy Hebebrand is a freelance writer with eight years of experience in the financial industry. She earned her BA from the University of West Florida and her MA from Full Sail University. Since she started working as a full-time freelance writer three years ago, she has written on topics spanning many areas including housing, family and parenting, legal and professional / corporate communications.