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.
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 — the same year it expects carbon emissions to peak.
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 121% over the past year:
- Energy Fuels Inc. (NYSE American: UUUU)
- Ur-Energy Inc. (NYSE American: URG)
Other uranium miners have also seen significant gains in the same period:
- Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF): 82.49%
- Fission Uranium Corp. (TSX: FCU | OTCQX: FCUUF): 116.67%
Here’s what experts say about why uranium stock is rising:
Why Uranium Stock Is Going Up:
- The U.S. currently imports about 90% 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 in the 2020 election gave uranium stock prices a boost because 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 the many shutdowns resulting from the COVID-19 pandemic and the need for medical application to help to combat it, the demand for uranium increased quickly last year and remains high. This puts pressure on governments to fund uranium mining. It also puts pressure on the miners to produce enough to meet demand.
- There’s been significant new investment from the likes of the new Sprott Physical Uranium Trust commodity exchange-traded fund and uranium producer Kazatomprom, which announced that it will buy uranium from the spot market through 2023 rather than increase production to meet demand.
When you’re deciding on adding a stock to your portfolio, consider maintaining a ratio of 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||Dec. 16, 2020||Dec. 15, 2021|
|Energy Fuels (UUUU)||$3.14||$7.84|
|Uranium Energy (UEC)||$1.71||$3.57|
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. On Nov. 3, just a few days after the company reported a net loss in its third-quarter earnings release, Bank of America upgraded its rating of Cameco from “neutral” to “buy,” stating the stock could rise 30% from its current level based on strength in uranium prices “as nuclear power’s role in decarbonization is reconsidered,” CNBC reported. Shares closed at $27.19 on that date.
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 products. 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.
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.
According to its third-quarter earnings report, Energy Fuels is making progress toward making its White Mesa Mill a critical minerals hub by preserving production capabilities while it further diversifies its portfolio. The company is also looking for ways to capitalize on rising uranium prices.
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:
- 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.
Although technically a penny stock currently trading at $3.60, 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 $943 million, and the stock is up 102.84% year to date as of Dec. 16.
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 2.3 million pound-per-year capacity for uranium and can increase to full production in as few as nine months, according to the company’s third-quarter 2021 earnings report. Although it doesn’t expect to sell any of the 285,000 pounds of uranium it has in reserve in the next year unless it would profit the company to do so, rising prices could give Ur-Energy a nudge toward stepped-up production — and share prices — in 2023. In the meantime, analysts’ earnings projections say EPS could triple in the next year.
Ur-Energy has a market cap of $302.8 million.
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.
This article has been updated with additional reporting since its original publication.
Katy Hebebrand contributed to the reporting for this article.
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