The Case for Uranium Stocks

Uranium is a naturally occurring, radioactive chemical element. Uranium has many applications, including nuclear power, medical, military, consumer products, agricultural, space exploration, marine propulsion, scientific research, and others.

As the world searches for new energy sources, enriched uranium is a critical fuel powering nuclear reactors. Moreover, the bifurcation of the world’s nuclear weapons powers and increasing hostilities have increased the demand for uranium.

Uranium prices have more than doubled since 2020

• Uranium prices are trending higher after doubling since the 2020 pandemic-inspired low.
• Uranium is a critical raw material for nuclear energy and weapons. The geopolitical landscape and increasing demand for green energy alternatives will increase consumption over the coming years.
• Uranium supply-demand fundamentals support a continuation of the bullish trend.
• Uranium exploration and mining companies will benefit from higher prices.

Cameco is a leading producer

• Canadian uranium producer Cameco (CCJ) owns the world’s largest high-grade reverses and low-cost operations.
• At $58.30 per share, CCJ had a market cap of over $25.8 billion. The highly liquid stock trades over 4.6 million daily and pays shareholders a nominal twelve-cent annual dividend, translating to a 0.20% yield.
• CCJ shares have moved over tenfold higher from the March 2020, $5.30 per share low.

Speculative alternative uranium stocks

• Junior uranium mining companies have provided investors with oversized rewards over the past years.
• NexGen Energy Ltd (NXE) is a Canadian uranium company whose stock price increased from $0.50 in March 2020 to $8.16 per share in early December 2024.
• Denison Mines Corporation (DNN) is a Canadian and U.S. uranium producer whose shares have risen from 19 cents in March 2020 to $2.27 in December 2024.
• Uranium Energy (UEC) is a junior uranium resource company in the U.S. Its share rose from 35 cents in March 2020 to $7.93 in December 2024.
• Ur Energy Inc. (URG) is a Wyoming-based uranium producer. Its shares rose from 27.10 cents in March 2020 to $1.26 in early December 2024.
• Fission Uranium (FCUUF) is a Canadian uranium exploration company. Its shares increased from 7.0 cents in March 2020 to 59 cents in December 2024.
• Yellow Cake PLC (YCA.LN) is a European uranium producer. The shares have increased from $136 in March 2020 to $538.50 in December 2024.

Diversified Uranium ETFs

• ETFs that invest in several uranium mining companies can diversify idiosyncratic risks.
• The Global X Uranium ETF (URA) has rallied from $6.95 in March 2020 to $31.74 per share in December 2024.
• The Sprott Junior Uranium Miners ETF (URNJ) has rallied from $13.66 in March 2023 to $22.76 per share in December 2024. URNM began trading in February 2023.
• The Sprott Uranium Miners ETF (URNM) has rallied from $7.78 in March 2020 to 47.00 per share in December 2024.
• The VanEck Vectors Uranium and Nuclear Energy ETF (NLR) has rallied from $33.52 in March 2020 to $93.19 per share in December 2024.

Expect volatility- Potential for rewards comes with risks

• Uranium is a highly volatile commodity.
• The supply-demand fundamentals and technical trends favor a continuation of the bullish trend.
• Mining companies tend to outperform the underlying commodity on the upside on a percentage basis, but they also underperform on the downside. They are leveraged investments.
• The potential for rewards comes with commensurate risks.

Uranium remains a hot commodity in late 2024 as the fundamental and technical market dynamics remain bullish. One of the most significant risks is liquidity, as uranium does not trade on any commodity futures exchange. Low liquidity tends to exacerbate upside and downside price variance. While the path of least resistance of uranium and uranium mining and exploration share prices remains bullish, the higher prices rise, the higher the odds of a correction increase.

Thanks for reading, and stay tuned for the next edition of the Tradier Rundown!