What happened
Uranium stocks were on Monday with stocks of nuclear Denison mines (NYSEMKT: DNN) 10.2% increase, Uranium energy (NYSEMKT: UEC) Increase of 10.6% and Energy fuels (NYSEMKT: UUUU) Closing 14.3% higher.
It’s not difficult to find out why: uranium prices have increased significantly.
Image source: Getty Images.
so what
As OilPrice.com reported over the weekend, the spot price for U308 (triuranium octoxide, also known as yellowcake, and the most stable form of uranium oxide found in nature) rose above $ 30 a pound for the first time this year last week and approached this value its highs of last year.
Investment banks BMO Capital Markets and Morgan Stanley both believe uranium prices have set a minimum amount and are unlikely to drop below $ 30. On the contrary, the analysts predict that uranium will continue to recover and could reach $ 50 by 2024.
The reason: According to energy experts, it is unlikely that the Biden government can achieve its goal of converting the American economy to clean electricity without building more nuclear power plants and supplying them with uranium. In addition, experts from the European Union should advise EU governments to classify nuclear energy as sustainable and thus to qualify for investments as a form of green energy.
What now
The good news doesn’t stop there either. Last month, China unveiled its 14th five-year economic plan, which includes plans to increase nuclear power capacity from the current 48 gigawatts to 70 GW by 2025.
With 50 new nuclear power plants under construction around the world and more on the way, the demand for uranium is expected to increase over time. Meanwhile, some large mines have either ceased or temporarily suspended production due to COVID-19, creating an imbalance between supply and demand that drives prices up. Investors are betting that uranium mining stocks like Denison, Uranium Energy, and Energy Fuels will benefit from this – and they’re probably right.
This article reflects the opinion of the author who may disagree with the “official” referral position of a Motley Fool Premium Consulting Service. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.
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