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Uranium Stocks | Is This Atomic Investment a Good Idea?

Uranium’s long-term outlook seems promising, but the constant disruption in the ratio of supply and demand has affected the commodity’s price. The industry giant, Cameco, has suspended multiple mining projects in the past to stabilize the price of uranium stocks.

Uranium and other reactive natural chemicals have had a bad rep in the past. This sentiment is gradually changing, as the world is shifting from fossil fuel to renewable energy resources. Some of the top-rated uranium mining companies listed in the NYSE (New York Stock Exchange) are:

Cameco (NYSE: CCJ)
Uranium Energy Corp. (NYSE: UEC)
Ur-Energy (NYSE: URG)
Energy Fuels Canada (NYSE: UUUU)
NextGen Energy (NYSE: NXE.TO)
Yellow Cake (NYSE: YCA)

Before we dive into uranium investing, it is essential to know about the basics of uranium and what makes it a valuable commodity.

What is Uranium? | Uranium Stocks

Uranium (U) is a heavy metallic element that has been used as a reliable source of concentrated energy for many years. It has a melting point of 1132°C. It is naturally found in most rocks with a concentration of 2 to 4 parts per million. Despite the high value associated with this metal, it is as abundant in Earth’s core as other common elements like tin and tungsten.

Only one kilogram of uranium can generate energy that is equivalent to the production capability of about 1,500 tonnes of coal. Uranium is a mixture of two isotopes: uranium-238 (U-238) and uranium-235 (U-235). The occurrence ratio of U-238 in natural deposits is about 99% while that of U-235 is 10%.

Top Uranium Producing Countries

Here’s a list of the top 10 countries that produce uranium:

Kazakhstan
Canada
Australia
Niger
Namibia
Russia
Uzbekistan
China
USA
Ukraine

Uranium Investing | Uranium Stocks

One of the easiest ways to invest in uranium is to purchase uranium stocks. With the current dip in the market, the investors can enter with low investment. The outlook for these stocks is bullish, as the prices are inevitably going to rise with the increase in demand for nuclear power in the foreseeable future.

What Drives the Price of Uranium Stocks? | Uranium Stocks

Following are some of the factors that have a great impact on the value of uranium stocks.

Nuclear Power Demand

One of the major factors that increase the price of uranium stocks is the increase in the demand for nuclear power as an alternative to fossil fuel. As more and more nations are shifting to greener methods for energy generation, the nuclear energy industry is gaining traction worldwide. For example, in France, there are about 56 nuclear power reactors that are currently used as primary power sources in the country.

Secondly, the cost of standard fossil fuels, such as coal and natural gas, is directly proportional to the value of uranium stocks. When the price of fossil fuels increases, then this can demand a sudden increase in the demand for greener methods for the production of electricity.

Major Uranium Producers

A small group of nations dominates the market of uranium. Kazakhstan is the largest producer of uranium in the world, which accounts for about 42% of the world supply annually. About 71.2% of the world’s uranium production is extracted from only three countries: Kazakhstan, Canada, and Australia.

The channel of supply can easily be disrupted if the major players, such as Kazatomprom or Cameco, decide to bring changes in the prices of uranium stocks worldwide. Just as OPEC (Organization of the Petroleum Exporting Countries) regulates the price of oil supplied to all the countries, these top uranium-producing countries hold the same regulation power.

Top Uranium Stocks to Buy | Uranium Stocks

Some of the best stocks that meet the anticipated demand are mentioned below:

Cameco Corporation (NYSE: CCJ)

With an estimated 455 million pounds of potential mineral reserves, Cameco is a Canada based that provides uranium and nuclear fuel products globally.

The company accounts for about 18% of the world’s uranium production, which attracts thousands of new investors each year for long-term contracts. To expand the supply chain network, the company has spread its footprint not only in Canada but also in other countries like the US and Australia.

Uranium Energy Corp. (NYSE: UEC)

With a market cap of about $201.73 million, UEC is a uranium mining company based in the United States. The company boasts about its diversification, as it has its properties in various locations like Texas, Wyoming, Paraguay, New Mexico, and Arizona. UEC’s stocks are based on contracts that have no pre-speculated prices, as they are based on the global uranium supply market.

Ur-Energy Inc. (NYSE: URG)

Ur-Energy is a junior mining company based in Wyoming, USA. It mainly serves the purpose of the development and exploration of mineral properties. Even though the company is a newcomer in the uranium field, it is capable of producing about 2-million-pound uranium per year. After the acquisition of the asset Shirley Basin, the company has expanded its projects in the country. If the project is successful, then the company would be able to produce 6.3 million pounds of uranium (U3O8) per year.

Why Enter the Uranium Stocks Market? | Uranium Stocks

With the continuous increase in global energy consumption, the need for green energy projects would increase gradually. China is planning to construct eight new nuclear reactors, and similarly, Russia and India are also following the lead.

Microsoft billionaire Bill Gates launched TerraPower in 2008, which is a nuclear energy technology company that aims to supply carbon-free energy in the coming decades. So, the future of uranium stocks seems promising, and now might be the right time to invest.

Conclusion | Uranium Stocks

Market watchers are optimistic about the prices of uranium stocks in the coming years. With the increase in awareness regarding renewable energy resources, governments are becoming more inclined to approve nuclear projects in different countries.

Now that the shares in Cameco Corp. reaching above $14 in February 2021, the market boom in the upcoming decades is inevitable. For novice investors, this is the right time to invest in uranium stocks, as they can get huge ROI in the years ahead.