Are the Golden Days of Uranium Stocks Returning?
Stock Analysis & Ideas

Are the Golden Days of Uranium Stocks Returning?

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The renewed focus on nuclear power highlights the improving global demand scenario for uranium.

The Russia-Ukraine crisis pushing fuel prices higher and global warming could be paving the way for what can be called the return of the golden days of uranium stocks. After Japan’s Prime Minister Fumio Kishida expressed the government’s renewed focus on nuclear energy at a meeting on ‘green transformation,’ Uranium stocks like Energy Fuels Inc. (NYSE:UUUU) and Cameco (NYSE:CCJ) witnessed a double-digit rise in yesterday’s trading session.

In a bid to diversify its energy sources amid the rising global crisis and meet the carbon-neutral target by 2050, the Japanese government is contemplating building next-generation nuclear reactors, restarting existing offline nuclear plants, and extending their lifespans. After the 2011 Fukushima disaster, the country suspended 46 of its 50 operational power reactors, per the International Atomic Energy Agency.

Not only Japan, but other Asian countries like China and South Korea are also making significant strides in the nuclear energy space. China aims at expanding its nuclear capacity by 40% to 70 gigawatts by 2025, according to an Al Jazeera report. Revising its previous policy, South Korea has also restarted building two reactors and extended the lifespan of the already operational ones, the report added.

Supporting nuclear power plants, President Joe Biden has also started a $6 billion program in the wake of rising energy prices.

Uranium Stocks to Ride the Tide

Uranium is the most extensively used fuel by nuclear power plants for nuclear fission. Considering the change in the policies for nuclear energy, it seems that the tone is getting set for the return of the golden era for the uranium stocks, which faced the brunt of Japan’s 2011 tragedy.

Investors, who are willing to ride the tide of a steep rise in uranium demand, can take a look at the following stocks, which command a Strong Buy consensus rating on TipRanks:

Energy Fuels Inc. (NYSE:UUUU)

With a market cap of $1.15 billion, Energy Fuels is a uranium mining company. This U.S.-based company supplies triuranium octoxide (U3O8) to major nuclear utilities. It also manufactures vanadium from some of its projects. Energy Fuels is also increasing the full commercial-scale manufacturing capacity of RE Carbonate.

In the recently reported earnings results, the company said supply and demand fundamentals in the underlying market indicate that the prices will remain high in the future. Notably, shares of the company rose 20.5% in yesterday’s trading session on the news of Japan’s change of nuclear energy policy.

Turning to Wall Street, the Street is highly confident about UUUU stock, which enjoys a Strong Buy consensus rating based on five Buys. Energy Fuels’ average price target of $10.28 signals that the stock may surge nearly 40.8% from current levels.

TipRanks data shows that financial bloggers are 100% Bullish on Energy Fuel, compared to the sector average of 75%.

Cameco (NYSE:CCJ) 

Canada-based Cameco is a prominent provider of uranium fuel. The company, which commands a market cap of $10.77 billion, saw its shares surge 14.7% on the latest development in the nuclear energy space.

During the recently reported earnings results, the President and CEO of Cameco, Tim Gitzel, said, “Our results reflect the very deliberate execution of our strategy of full-cycle value capture. And, we are benefiting from the higher average realized prices in both our uranium sales and our fuel services sales as the market continues to transition and geopolitics continue to highlight the concentration of supply concerns.”

On TipRanks, analysts have a Strong Buy consensus rating on the stock, which is based on six Buys. CCJ’s average price forecast of $34.54 implies 27.9% upside potential. Shares of the company have climbed about 18.9% year-to-date. Also, financial bloggers are 69% Bullish on CCJ.

Prospects Look Bright for Uranium Stocks

According to the International Energy Agency, nuclear power makes the second-largest low-carbon electricity source across the globe. It also estimates that twice the amount of present overall nuclear capacity might be required by countries to achieve the net-zero carbon emissions goal by mid-century. Thus, the overall bullish backdrop highlights the growing demand for uranium, which can translate into handsome returns from the players in the space.

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