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’s also applied as ammunition 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 10% of the world’s electricity.
With 53 more nuclear reactors under construction and 110 planned, the world will see an increase of 45% capacity for nuclear energy. Of these reactors, 54 are in China.
Good To Know
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.
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 around 150% in the past three months:
- Energy Fuels Inc. (NYSE American: UUUU)
- Ur-Energy Inc. (NYSE American: URG)
Other uranium miners are seeing gains of about 70% in the past three months:
- Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF)
- Fission Uranium Corp. (TSX: FCU | OTCQX: FCUUF)
Here’s what experts say about why uranium stock is rising:
- The U.S. currently imports 95% of its uranium. Increased demand is putting pressure on the government to produce more of its own uranium for nuclear power.
- Joe Biden’s presidential victory affects uranium stock prices since he is emphasizing alternative fuels.
- Even without Biden’s victory, the demand for uranium would be high. The need for uranium spans across the political spectrum since electricity is such a basic necessity.
- Because of many shutdowns during the COVID-19 pandemic, the demand for uranium is quickly increasing. This puts pressure on governments to fund uranium mining. It also puts pressure on the miners to produce enough to meet demand.
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||March 31, 2020||March 19, 2021|
|Energy Fuels (UUUU)||$1.18||$6.52|
|Uranium Energy (UEC)||$0.56||$2.75|
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. Even through the COVID-19 pandemic, the company showed stability. Cameco’s uranium sector contributed over 90% to its gross profit.
Cameco provides 18% 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.
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.
This company made our list because leadership recently announced that it’s expanding into rare earth metals. By diversifying projects, the company shows that it’s growing.
The diversification also spreads its income over a larger area, minimizing the impact of the uranium market on profit margins. If the uranium market struggles, the company is still supported by its other endeavors.
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:
- New Mexico
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.
This company is a good investment because of its impressive presence in the U.S. market. It has a market cap of $201.73 million.
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 $90.3 million. One reason to watch Ur-Energy is that it has produced four quarters in a row of 100% earnings.
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
- Debt-to-equity ratio
- 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.
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- Nasdaq. 2021. "Why Energy Fuels Stock Jumped 12% at the Open Today."
- U.S. News. 2020. "How To Pick Stocks: 7 Things All Beginner Investors Should Know."