Thanks to supply-demand issues, uranium prices are at 16-year highs. And they’re not likely to come down any time soon, creating an opportunity for beaten-down uranium stocks.
To start, one of the world’s biggest producers of uranium, Kazatomprom just said, “It will produce only 80% of its permitted maximum uranium output allowed under Kazakh subsoil usage contracts, instead of the previously announced 90% level,” as noted by S&PGlobal.com.
“The company had warned in a Jan. 12 statement about the potential to not meet the previously indicated 90% level due to the sulfuric acid issue and delays in completing construction works at newly developed [uranium] deposits.”
On top of that, demand is strongly rebounding. Especially with 22 countries – including the U.S., Canada, the UK, and France – pledging to triple their nuclear capacity by 2050. Fueling further upside, uranium miners are struggling to get uranium out of the ground after years of slow demand since Fukushima.
All of which is creating a massive opportunity for uranium stocks.
Cameco Corp. (CCJ)
CCJ Stock: Hand in long yellow glove holding a chunk of uranium material
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Since July, Cameco (NYSE:CCJ) rocketed from about $30 to a frothy double-top high of $50. From there, it pulled back to about $40.53, where it’s now oversold on RSI, MACD, and Williams’ %R. From here, I do expect CCJ to again test its former high shortly.
All because the supply-demand scenario isn’t cooling.
In fact, according to Cameco CEO Tim Gitzel uranium prices are soaring higher due to global factors that will “persist for years,” says Seeking Alpha. “Market tightness caused by supply chain challenges, ongoing mine depletion, declining secondary supplies, and a decade of underinvestment amid low market prices likely will persist well into the next decade,” Gitzel added.
With earnings, the company missed with EPS of C$0.21. However, its C$844 million revenue, up 61% year-over-year (YOY) did beat expectations. Better, its full-year 2024 guidance for C$2.85 billion to C$3 billion was also above estimates for C$2.81 billion.
NexGen Energy (NXE)
Environmental protection, renewable, sustainable energy sources. Plant growing in the bulb concept. renewable energy stocks to buy
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NexGen Energy (NYSE:NXE) is also oversold on RSI, MACD, and Williams’ %R. Currently trading at $7.05, the Canadian uranium company could rally back to its initial $8.25.
Helping, the company’s Rook I Project is being developed into the largest, low-cost producing uranium mines in the world, according to the company.
It also expects Rook I to produce about 30 million pounds of uranium each year. Even better, it could provide 50% of Western supply at some point. And, while production hasn’t started just yet, NXE says it could deliver a free cash flow (FCF) of $2 billion in the first five years.
Also, as noted in its investor deck, demand for uranium is expected to jump 127% by 2030. By 2040, demand will be up by 200%. All of which could create a massive 240-million-pound deficit. Worse, that will continue to widen as growth in annual demand is expected to triple by the time 2050 rolls around, as also noted by the company.
Denison Mines (DNN)
A photo of a uranium mine
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There’s also Denison Mines (NYSEAMERICAN:DNN), a uranium exploration and development company with interests in theAthabascaBasin region of northernSaskatchewan, Canada, as noted on the company’s site.
The company also has 95% interest in its Wheeler River Uranium Project – the “largest undeveloped uranium project” in the “infrastructure-rich eastern portion of the Athabasca Basin region of northern Saskatchewan,” as well, says Denison Mines.
Even more impressive, according to President and CEO David Cates, “The sheer magnitude of Denison’s numerous operational accomplishments in 2023 reflects an extraordinarily productive time for our Company. With the completion of the Phoenix Feasibility Study in June, we have cemented Phoenix’s position as a globally leading uranium development project, showcasing Denison’s industry leadership in the de-risking and application of the In-Situ Recovery mining method in the Athabasca Basin.”
Better still, earnings haven’t been too shabby either. For 2023, the company posted EPS from continuing operations of 11 cents – a 450% jump YOY.
Energy Fuels Inc. (UUUU)
Powdered and solid uranium in front of a white background.
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We can also look at oversold uranium producer Energy Fuels (NYSEAMERICAN:UUUU). With the supply-demand issue, the company has been ramping up production at three of its developed mines in Arizona and Utah. It’s also preparing two other mines in Colorado and Wyoming with production expected in about a year. And it’s advancing a few other larger-scale U.S. mines.
Earnings have been just as solid. EPS of 62 cents was up from a year-earlier loss of 38 cents. Revenue was up 203% YOY to $37.93 million from $12.5 million.
Even better, as noted by the company, “As long as market prices are strong, we will continue to selectively capitalize on spot market sales opportunities as we ramp up our production, in ways that are unique to our Company, in 2024 and beyond, and with limited capital.”
After dropping to about $6 a share, UUUU is slowly pivoting higher. From a current price of $6.33, I’d initially like to see it retest $8.25.
There’s also Uranium Royalty (NASDAQ:UROY), a Canadian company that owns interests in uranium mines in the U.S. and in Canada. It’s also oversold after pulling back from $3.67.
Not only is it gaining exposure to uranium prices without ever having to deal with the risks and costs associated with mining, it’s also seeing royalties, and receiving payments from uranium mine operators based on production or uranium project sales. It’s also exposed to uranium streams, where it makes a payment to an operator in exchange for long-term rights to a fixed percentage of future production, according to the company’s site.
At the moment, it has interest in properties operated by Uranium Energy Corp. (NYSEAMERICAN:UEC), Cameco, enCoreEnergy (NASDAQ:EU), PaladinEnergy (OTCMKTS:PALAF), and Energy Fuels to name a few of the top ones.
clean energy stocks: a nuclear power plant in Belgium
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Or, if you want to diversify with top uranium mining stocks, we can look at an exchange-traded fund (ETF) like the Sprott Uranium Miners ETF (NASDAQ:URNJ).
With an expense ratio of 0.80%, URNJ is a pure-play junior uranium mining ETF that tracks the performance of mid-, small-, and micro-cap uranium-related stocks. Some of its top holdings include Paladin Energy, NexGen Energy, Uranium Energy Corp., Denison Mines, and Energy Fuels to name a few.
Over the last few weeks, the ETF did pullback from about $30 to $24.32. Now oversold, I’d like to see the URNJ ETF revisit its prior high initially.
Also, as noted by Seeking Alpha, “Historical behavior suggests that small and mid-size uranium miners are likely to catch up and outperform in the near future, especially with potential catalysts” such as the current supply-demand issue.
Higher uranium prices, and a recovery in oversold uranium stocks should boost URNJ near term.
Global X Uranium ETF (URA)
Uranium on top of black rock background.
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Another hot, but oversold ETF to consider is the Global X Uranium ETF (NYSEARCA:URA). Since bottoming out in March 2023, the ETF ran from about $18 to a high of $32.60. Now at $27.46, it’s also technically oversold. From here, I’d like to see in initially retest its prior high and head higher with the supply-demand issues.
With an expense ratio of 0.69%, the ETF offers exposure to companies involved with uranium mining, and the production of nuclear components, including extraction refining, exploration, and manufacturing. In fact, some of its top holdings include Cameco, NexGen Energy, Yellow Cake (OTCMKTS:YLLXF), Denison Mines, and Boss Energy (OTCMKTS:BQSSF) to name a few.
Helping, demand is likely to rise significantly, especially as countries look to nuclear energy, as a key energy source. Geopolitics will also send uranium prices, stocks, and ETFs, like the URA ETF to higher highs. That includes the U.S. ban on uranium from Russia.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.
