A Big Opportunity in Uranium

Uranium Nuclear Energy

World leaders are starting to spend big on emissions-reduction plans. French President Emmanuel Macron recently unveiled an eight-billion-euro plan to decarbonize the world’s seventh-largest economy. One that prominently featured uranium nuclear power as a carbon-free energy source. 

France Isn’t the Only One Expanding Nuclear Power

Macron is not alone in this. Around the world, nuclear power is experiencing a renaissance. After all, the operation of such power plants does not produce any direct CO2 emissions.

Nuclear power plants obviously come with some unique risks, as we learned from the tragedies at Fukushima and Chernobyl. But such disasters are extremely rare – and experts agree that the environmental benefits of nuclear power outweigh the risks.  

Just take a look at this new study by the International Atomic Energy Agency (IAEA) to see how quickly the momentum is building for nuclear power… 

The IAEA recently revised its forecast for the global expansion of nuclear power for the first time in ten years. According to the new forecast, global nuclear production capacity could double to as much as 792 gigawatts by 2050. Previously, the agency had forecast 10% lower growth.

In China, 44 new nuclear power plants are to be built in the next few years, on top of 23 in Russia and 14 in India. Even in Japan, the site of the Fukushima disaster, the share of nuclear power in the energy mix is expected to grow significantly by 2050. And according to President Biden, there are also plans to do so in the USA.

The Uranium Hype Has Already Started

For commodity investors, this is a unique opportunity. The price of uranium fuel has already risen by 50% in recent months. So the capital markets are assuming that demand for the nuclear raw material will increase significantly in the coming years.

But it’s not just professional investors who are jumping on the bandwagon. Small investors are also once again banding together on Reddit to buy up uranium shares. The small investors are fond of the Sprott Physical Uranium Trust (OTC:SRUUF), which was only launched in July. 

To date, the trust has purchased around 28 million pounds of uranium as an investment. The fund is thus hoarding large amounts of the world’s uranium supply, driving the shortage and thus the price up.

Cameco (NYSE:CCJ)

If you as an investor want to bet on uranium now, there is hardly any way around individual stocks. The problem is that there are a number of small, new companies which are currently trying to shake up the market. The risk associated with these smaller names is high. That’s why I advise you to go for more established players.

One of them is Cameco. The Canadian company was founded back in the late 1980s and is a reliable uranium supplier with sales in the billions. Cameco operates uranium mines and a uranium enrichment refinery in Canada.

What You Need to Know Now

It’s worth noting that Cameco is facing some headwinds right now. First, despite high uranium prices, Cameco is likely to face losses in the current year. However, it should be in the black again in 2022 and beyond.

The stock also has a relatively-high valuation. On a 12-month basis, the stock, which has been hyped on Reddit and elsewhere, is up 185 percent.

The fact is: For you as an investor, Cameco is less risky because of its established market position, but it is still difficult to assess in the short term. In the long term, however, the group is likely to be one of the winners in view of the nuclear projects in many countries.

Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.
Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.

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