Nations are increasingly turning to alternative energy sources, and nuclear power is looking more attractive. Accordingly, uranium stocks are booming. Nearly every uranium stock more than doubled in 2021. That rise was close to unthinkable post-Fukushima Daiichi nuclear disaster. That event cleared nuclear power from the global energy map.
The uranium industry is growing.
According to the International Atomic Energy Agency, worldwide nuclear-generating capacity reached 393 GW in 2020. Moreover, nuclear bulls think global generating capacity will double by 2050.
Uranium demand going up means market growth. So it’s no surprise that uranium prices have gone up over the last year. While we don’t see a massive rally, we believe that the uranium price will continue to grow in the long run.
And continuing uranium price growth is excellent news for uranium stocks. Higher uranium prices will help mining and exploration companies earn more money.
Furthermore, Sprott gave us another catalyst when they launched the most significant physical uranium ETF to date. More on that below.
Let’s look at three uranium stocks that could profit from rising nuclear power demand.
Uranium stocks to watch
Cameco Corporation (NYSE:CCJ)
Cameco is one of the world’s leading uranium producers. The firm has the authority to produce 53 million pounds of uranium concentrate each year.
Furthermore, the firm has 455 million pounds of established and probable mineral resources. The firm also believes that it has the world’s best-undiscovered uranium projects. Proved reserves mean potential for expansion.
According to the company, Cameco’s cash and short-term investments totaled $1.4 billion. There is also a $1 billion unutilized credit line available. As a result, there is headroom for development and growth projects with a full liquidity buffer.
Cameco is a global uranium miner with a dual-listed stock that offers investors both Canadian and American stocks. There are two reasons investors may want to invest in Cameco shares. First, Cameco is one of the world’s largest uranium miners. Second, its actions significantly influence the industry, especially the supply side.
Cameco, for example, was one of the first uranium miners to cut production over the last few years drastically. That production cut helped relieve market oversupply concerns and support uranium prices. Other players in the sector loved the move.
But here’s the thing you need to know. For Cameco, the spot market is not the primary source of revenue – long-term contracts with utilities are. That’s because utilities have returned to negotiating uranium contracts, pushing long-term uranium prices higher.
In fact, during Cameco’s third-quarter 2021 earnings call, management said the uranium market is “more constructive” than it has been in a long time. Moreover, Cameco is well-positioned in the uranium market. So, those remarks from the miner are very encouraging and predict profitability for the company.
The World Nuclear Association projects nuclear fuel demand will grow by 2.6%. Growth has increased from the previous estimate of 2%. Cameco will benefit as more people rely on nuclear energy for power.
Puranium Energy Ltd. (CSE:UX.CN)
Puranium Energy might be our riskiest uranium stock pick because, unlike the established uranium miner Cameco, it focuses on exploration. Commodity exploration has the highest risk, and the highest potential for reward. So why are we watching Puranium Energy stock?
Puranium’s Namibian property, surrounded by successful uranium mines, caught our eye. Puranium owns approximately 85% interest in seven Estate Uranium Properties. Those properties add up to 93,514 hectares in the Erongo Province of Namibia.
Puranium’s acquisitions are remarkable, and here’s why. Their landholdings are classified as Exclusive Prospecting Licenses, and are all in the Central Zone of the Damara Belt. That area has excellent uranium geology. The region is home to significant uranium mines and projects, each at different stages of development. Globally, the region accounts for an estimated 8% of the world’s uranium production.
The company’s land surrounds top uranium mines and deposits in Namibia. And we love that Puranium picked up these assets at a great price. They did so mainly through issuing shares to a third-party vendor. The transaction vaulted the firm into position as a significant landowner in the district.
Furthermore, Namibia recently lifted an exploration moratorium. Other players had given up their concessions, allowing them to expire. That allowed Puranium to acquire control of EPLs with known geologic trends.
Lastly, Puranium has a healthy balance sheet with no debt, allowing for a clean path to future equity raises.
Uranium bulls should watch this stock. Puranium may be a hot discovery story with speculative appeal in an industry that’s ready for another boom. In what could be the early phases of a longer-term bull phase, Puranium positions its investors well.
Want to bet on uranium prices? Buy this ETF (OTC:SRUUF)
Finally, the Sprott Physical Uranium Trust Fund is your best bet if you want to play a rally in spot uranium prices.
The Sprott Fund has been a crucial factor in the recent rise in uranium prices. It’s been continuously buying uranium on the spot market since its inception in July.
The Sprott fund is now seeking growth and doesn’t want to miss out on any new investor interest in uranium. The greater the demand for uranium, the more units the Sprott Fund can sell. And as the number of units it sells rises, it will have to buy more of the underlying commodity – uranium. That’s all that spot uranium prices need to keep rising.
The Sprott Physical Uranium Trust Fund also agreed to buy the North Shore Global Uranium Mining ETF. The purchase will create a Sprott uranium equity ETF. As a result, the Sprott Physical Uranium Trust ETF may be a winning uranium play in your portfolio.
Three great uranium plays
So there we have it – a uranium stock that fits the bill no matter your investing objective. For the more conservative, we love Cameco Corporation and have for many years. For a high risk/reward take, we’re eyeing exploration company Puranium Energy Ltd. And to stick with playing the commodity, Sprott’s Physical Uranium Trust ETF is the one to watch.