Top Uranium Stocks: What You Need to Know Before Investing

October 31, 2022, 2:54 PM

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The demand for cleaner fuel alternatives is on the rise. As one of the world’s most abundant metals, uranium is a popular choice. A single pellet of uranium produces the same amount of electricity as:

  • One ton of coal

  • Three barrels of oil

  • 17,000 cubic feet of natural gas

Read: 5 Things You Must Do When Your Savings Reach $50,000

Uranium Stock Prices

Of eight uranium stocks listed on U.S. stock exchanges, only one, Uranium Energy Corp. (UEC), has seen gains over the past year. It has grown 11.70% over the last 12 months, to $4.22, far outpacing other basic materials stocks, which have declined over 10% this year.

These stocks are down for the last 12 months but have made gains since the beginning of the year:

  • Ur-Energy (AMEX: URG): 4.10%

  • Cameco Corp. (NYSE: CCJ): 9.67%

The following uranium stocks are down for the year and year to date but have made gains for at least one quarter:

  • Denison Mines Corp. (AMEX: DNN): 5.04% (quarter)

  • Centrus Energy Corp. (NYSE: LEU): 49.64% (half year)

  • Energy Fuels Inc. (NYSE: UUUU): 7% (quarter)

Other uranium stocks are down for all the periods listed above:

  • NextGen Energy Ltd. (NYSE: NXE)

  • Uranium Royalty Corp. (NASD: UROY)

Factors Influencing Uranium Stock Prices

Here’s what experts say influences uranium stock prices:

Which Uranium Stocks Are Worth the Investment?

The best uranium stocks are identified because of their:

  • Capacity to meet anticipated demands in the industry

  • Investor interest

  • Potential for future gains

Stock

Nov. 1, 2021

Oct. 28, 2022

Cameco (CCJ)

$26.99

$24.24

Energy Fuels (UUUU)

$10.28

$7.30

Uranium Energy (UEC)

$4.58

$4.22

Ur-Energy (URG)

$1.90

$1.31

1. Cameco Corp. (CCJ)

Cameco Corp. operates worldwide in the production and sale of uranium. Founded in 1987, it’s one of the largest companies in the market today.

Cameco provides 9% of the world’s uranium products. It’s a great option for investing, since it has long-term contracts. This protects the company from fluctuations in pricing.

Zacks Investment Research has increased its consensus estimate for CCJ earnings by 22% based on a positive earnings outlook trend. As of Oct. 27, CCJ had grown 14.5% year to date while basic materials sector stocks overall lost an average of 10.3%.

2. Energy Fuels Inc. (UUUU)

Although Energy Fuels was once a leader in the U.S. uranium mining market, other companies have risen to the forefront. Still, Energy Fuels has remained a steady competitor, with milling operations in Utah and mining and exploration operations in the southwestern U.S.

The company has shown solid growth potential, announcing early in 2021 that it was expanding into rare earth metals. In May, Energy Fuels announced that it had entered into a binding agreement to purchase 17 mineral concessions in Bahia, Brazil, which it believes has large quantities of heavy metals that will feed its “quickly emerging” U.S.-based rare element supply chain.

Energy Fuels previously reported that it’s making progress toward making its White Mesa Mill a critical minerals hub by preserving production capabilities while it further diversifies its portfolio.

Although the stock is down over the last year and is considered by some analysts to be overvalued, it’s still trading at well below its 52-week high of $11.39. Zacks’ consensus estimates project solid earnings and revenue growth for the upcoming quarterly earnings release and for the full year.

3. Uranium Energy Corp. (UEC)

Uranium Energy Corp. is a uranium mining and exploration company that currently operates in the southwestern U.S. Its properties are primarily located in Texas, Wyoming, New Mexico, Arizona and Colorado.

Uranium Energy represents one of the largest catalogs of uranium exploration in the U.S. It primarily operates by assessing possible acquisitions where miners determine that uranium is found. The company has expanded its U.S. warehoused uranium to 5 million pounds, with delivery dates out to December 2025, by purchasing “near cycle lows,” CEO Amir Adnani said in an April press release.

Although technically a penny stock trading at $4.22 as of Oct. 28, this company shows good investment potential for investors willing to risk it because of its impressive presence in the U.S. market. It has a market cap of $1.54 billion, and the stock is up almost 9% year to date as of Oct. 28.

4. Ur-Energy Inc. (URG)

Based in south-central Wyoming, Ur-Energy is a relatively new company that’s smaller than other uranium companies. Don’t let its size fool you, because Ur-Energy has a 2.2 million pound-per-year capacity for uranium and is preparing to return to “full production-ready status” this year. Although it doesn’t expect to sell any of the 285,000 pounds of uranium until it would profit the company to do so, rising prices could give Ur-Energy a nudge in 2023.

Ur-Energy has a market cap of $292.35 million as of Oct. 28.

Uses for Uranium

Once uranium is depleted for energy use, it’s reusable for other applications because it’s less radioactive. Ships use it for counterweights, and it also has applications in ammunition and armor.

Transition to Nuclear Power

In 2020, the U.S. government began to invest heavily in uranium mining, contributing to an uptick in the stock market. Uranium fuels nuclear power, which represents approximately 20% of America’s energy and 10% of the world’s electricity. And its use is growing. About 55 new reactors are under construction in 15 countries that include China, India, Russia and the United Arab Emirates, according to the World Nuclear Association. That figure does not include suspended construction in Ukraine, Japan, Brazil and elsewhere.

All told, about 440 nuclear power reactors are operating in 32 countries, 90 are planned or on order and 300 more are proposed, mainly in Asian nations, where electricity demand is increasing quickly. In addition, the U.S., Spain and several Norwegian countries are expanding their generating capacity by “uprating,” or increasing the licensed power level of their existing plants.

Good To Know

While the U.S. and the U.K. are currently leading the way in nuclear energy, China is projected to be the largest market in the world for uranium. The Chinese government set a goal to have nuclear energy contribute 10% to the country’s overall energy by the year 2030 — the same year it expects carbon emissions to peak.

Electricity Demand

Electricity use is impacting uranium demand in two distinct ways:

  • The use of electricity is considered one of the greatest signs of a strong economy for nations around the world. The strength of the world economy contributes a lot to demand in the stock market in general.

  • Uranium is trending as a way to fuel electricity. In turn, the rise in electricity use is fueling the demand for nuclear power and uranium. Investors see the demand for a product or service as a sign to invest for the potential to earn a profit.

How To Choose an Investment Wisely

Weigh the pros and cons of each investment option. Think about your long-term goals and what your tolerance is for risk. Things to take into consideration include:

  • The current price for a single share

  • The company’s trends in growth

  • Overall size of the company compared to its peers

  • Debt-to-equity ratio

  • Trends in dividend payouts to investors

Even though you should assess a company’s historical trends, keep in mind that past performance isn’t an indicator of future results.

Advice

When you’re deciding on adding a stock to your portfolio, consider maintaining a ratio of 70% big-company stocks, 20% midsize stocks and 10% small stocks. If you have your eye on a uranium company, where does it fit into your portfolio?

Katy Hebebrand contributed to the reporting for this article.

Data is accurate as of Oct. 28, 2022, and is subject to change.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

This article originally appeared on GOBankingRates.com: Top Uranium Stocks: What You Need to Know Before Investing

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