The ultimate guide to investing in uranium stocks

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Investors often overlook uranium stocks due to negative prejudices associated with nuclear fuel. But things may be moving in a different direction with the rising demand for clean and sustainable energy and the technological advancements that can meet that demand. And uranium may be finding its’ way back on the market.

Investing in uranium stocks – a change of scenery

Nuclear energy was a significant step that the Western civilization had made after WW2. It held a promise of availability of sustainable power in every corner of the world, without pollution, without corruption, without heavy labor.

Sadly, soon after, ideologies took over, and the battle for the power of man against poverty became a battle for the power of man against man.

The historical conclusion – Chernobyl. It was more a consequence of a flawed system of values than a technical malfunction that we could have averted. But ever since then, nuclear-produced power has had a dark label stapled on the back of it.

However, in the late 20th century, demands for a stable energy source were growing, and a change of scenery took place concerning public opinion and practical solutions the governments had undertaken. In the 90s, there was a great enthusiasm of the modern world for nuclear energy. It was the obvious solution as a stable, long-lasting power source that would last for the next two decades. As a result, governments around the world were committed to expanding and investing in nuclear plants. And reasonably so. Despite the negative reputation it inherited from the Chernobyl incident and the gruesome images it may conjure up in one’s head, nuclear power remains one of the cleanest, safest, and most reliable ways of getting energy.

Countries involved

Japan was one of the leaders of this expansion, having 30% of its’ electricity produced from nuclear power with plans to increase that even further.

Sadly, another accident hit that very same country in 2011. After the incident in Fukushima, Japan (also a consequence of poor decision-making to build a nuclear power plant in a tsunami zone), the enthusiasm for nuclear sources of energy diluted entirely. Plenty of plants shut down, and future projects for expanding nuclear plants came to a halt.

These events had a significant impact on the uranium stock market, with prices of bonds dropping constantly. This trend continued to 2016 when the prices of uranium stocks dropped drastically, from $70 per bond down to $20.

Kazakhstan filled the vacuum of low supply on the market, which, in a short time, would become the leading country in producing uranium. Ergo, uranium production by mining in Kazakhstan grew from 10% in 2007 to 39% in 2017. As a result, Kazakhstan has increased the world supply of this nuclear fuel in these ten years, while the demand has been consistently meager.

This instance further walloped the chances of investing in uranium stocks worth around $30 per bond around 2017.

A change of scenery

Yet another change of scenery, however, may be waiting around the corner. With the rise of computer technology, the growing number of electric cars, the modernization of wireless networks, and the ubiquity of smart devices, we need electricity more than ever. Yet, at the same time, concerns for the environment are constantly growing. And the natural sources of power cannot meet the demands of modern society to the fullest.

With more and more governments taking measures to lessen carbon-based fuels and lower toxic emissions, nuclear energy comes as a natural answer. Furthermore, many countries like France, Slovakia, Hungary, and Ukraine rely substantially on nuclear plants.

France is one of the leading countries regarding the number of active nuclear plants (58 reactors) that account for 72% of electricity gained as a power source. Slovakia (4 reactors) acquires 55% of electricity from nuclear power, while Ukraine (15 reactors) gains 53% of electricity by this method. Some countries have a substantial number of active reactors even though those account for a lesser percent of electricity produced, like Sweden with eight reactors, Belgium with 7, and Switzerland with 5, all of which stand at about 40% produced electricity from nuclear stations.

Global scenery

Even though most of these governments don’t have active plans for a significant expansion of their nuclear capacity, other relevant world economies like China and India have significant plans to expand their nuclear potential. Globally, there are 50 reactors under construction, and 100 more are in the plan.

The global increase in nuclear energy production is not the only factor impacting the demand for uranium on the market. The existing nuclear plants will be active for an extended period, making uranium mining a business to look into for the considerable future.

With all this in mind, the demand for this precious heavy metal will likely rise, and investing in uranium stocks may no longer be a brick wall.

Stock chart

 

Image credit: Maxim Hopman

What is uranium? How does it work in a power plant?

Uranium is a heavy metal that has been used as an energy source since the second half of the 20th century. Uranium can be found in most rocks in concentrations of 2 to 4 parts per million. It also resides in seawater and can be extracted from the oceans. Uranium is very dense! This metal melts at a temperature of 1132°C. Its’ symbol in the periodic system of elements is U.
Uranium in a nuclear plant works the same as any other fuel in any power station. Like any other power plant, the power comes from turbines that turn and produce energy.

The steam initiates the turning of these turbines. Unlike other power plants that burn coal or gas to create heat and consequently steam, the nuclear plant makes controlled fission. This method creates vast amounts of heat, and steam moves the turbines to produce electricity.
The core of a nuclear reactor is where the reaction which creates heat happens. Rods that absorb neutrons control this nuclear core. The rods are inserted or withdrawn in and out of the reactor, which controls the reaction level. This process makes the nuclear reactor stable, as it can always keep an even level of produced heat.

The nuclear reactor

The stability of the reactor also depends on the substance called the moderator. The moderator has the function to slow the speed of the released neutrons and therefore enable the chain reaction to continue. Usual moderators are water, graphite, and heavy water, depending on the type of reactor.
A typical reactor of 1000 megawatts (MWe) can provide enough electricity for an urban environment with up to one million people. One kilogram of uranium U-235 isotope can create the same amount of power as 1.5 million kilograms of coal.

The nuclear reactor has a very stable functioning principle with a meager percentage of possibility for malfunction.
Still, this mechanism is constantly perfecting with modern technologies taking over controlling and overseeing the production of power by fission.
Humanity has come a long way since Chernobyl and Fukushima, and we have a good reason to believe that our future can be a better one.

Eco-uranium: A plausible reason for investing in uranium stocks?

Predictions by the International Energy Agency should raise a couple of eyebrows of potential investors in uranium stocks. These predictions claim that global energy consumption will rise by 18% by 2030 and a stunning 39% by 2050. One of the possible scenarios of this forecast is that by 2050 nuclear energy’s share of the global energy market could increase to 13,7%.

This growing demand for a stable energy source has motivated experts and world leaders to find durable solutions for the future.

The main question is – How do we produce enough power output to sustain the needs of the modern world while at the same time looking to preserve our environment?

Uranium is one of the main options to consider, and with a good reason. Not only is it clean, but there is also a rise of new nuclear power technologies that aim to introduce new and exciting methods of extracting uranium from natural resources and use it more efficiently and with less waste.

Technologies that could use existing nuclear waste as fuel

As we speak, scientists are developing technologies that could use existing nuclear waste as fuel. For example, the so-called fast reactor has this impressive feature – apart from extracting at least ten times more energy from the same amount of uranium fuel, burning more than just U-235 isotope can also burn existing spent fuel. This feature results from nuclear waste conversion back into fissionable material by exposure to radiation in the reactor itself. Therefore, a fast reactor can burn ‘fresh’ uranium with unparalleled efficiency and ‘breed’ more usable material than it had consumed for further nuclear reactions.

When it comes to increasing the efficiency of nuclear plants, the contemporary technological achievements don’t end there. For example, there have been growing interests in small modular reactors (SMRs). This new kind of technology can generate a wide range of power output for different means. Furthermore, that means that this modern reactor model can adapt its’ energy use to varying demand levels. Moreover, it has one more advantage – it can use less uranium for the same energy output.

Another novelty in nuclear technology – the molten salt reactor also has impressive results regarding the efficiency of uranium use. Its energy production from the same amount of uranium is ten times larger than the old reactors. These staggering results come from its modern design that focuses on removing the accompanying products of fission and toxins while the reaction occurs.

Extracting uranium

As for the new and improved means of getting more uranium for future use, scientists are devising new methods of extracting uranium, one of which is the extraction from seawater. Of course, extracting uranium from seawater isn’t such a brand new idea, although it’s only recently produced results that invoke optimism. However, the research and development of economically profitable methods of extracting uranium from seawater have been important for scientists since the 1960s.

This technology uses different absorbents to extract the uranium that has a very low concentration in seawater, approximately 3.3 parts per billion or 3.3 micrograms per liter of seawater. Despite its’ low concentration, scientists are committed to developing an efficient method of extracting uranium from seawater since the quantity of heavy metal in the sea is practically endless. The metal would constantly replenish itself through river erosion of rocks and the natural process of uranium dissolving from the surface area of the ocean floor. Therefore, an economically profitable way of getting it would solve humankind’s demand for energy for as long as it exists.

The evolution of this technology is evident as scientists are getting closer and closer to finding an absorbent efficient enough to extract sufficient amounts of uranium from the sea at an efficient rate and with a promising financial gain.

How it started

It started in the 60s, with scientists testing titanium oxide as an absorbent, but this method wasn’t efficient enough. The next considered absorbents were irradiated polymer fibers. This absorbent was synthesized with a specific functional group (amidoxime group) that selectively absorbs heavy metals. It showed considerable improvement in efficiency compared to the initially considered titanium oxide. Another method of uranium extraction from seawater is using a uranium-specific nonwoven fabric as an adsorbent. However, the economic efficiency of this method was still dissatisfactory compared to the traditional methods of mining. Three hundred fifty kilograms of this absorbent extracted less than 1 kilogram of yellowcake after being submerged into the ocean for 240 days with the lowest extraction cost of $240 per kilogram of uranium.

However, in the 2010s, a massive breakthrough took place regarding the technology of uranium extraction. The breakthrough was, in fact, the development of a new absorbent called HiCap. It outperformed all the previous technologies extracting five to seven times more uranium, seven times faster than the other absorbents. Nevertheless, its’ cost-effectiveness remains a riddle to be solved. However, new ideas for perfecting the use of HiCap are developing as we speak. As a result, the goal of seawater extraction becoming sufficiently economic is closer by the day. Experts hope it will happen in the next ten years. Then, if the extraction price drops below $200-$220 per kilogram of uranium, this method will have become practical enough to replace mining as the source of uranium.

A different perspective

This information puts a different perspective on investing in uranium stocks. In addition, it represents a specific visionary approach to the question of our future as a society and as a species.

Investing in uranium stocks could represent investing in a cleaner environment and a belief that notable technological achievements are on the horizon.

Therefore, potential investors in uranium stocks have something to look forward to – investing in a cleaner, safer, and eco-friendly future.

Green leaves

 

Image credit: Vlad Kutepov

The renewability and the sustainability of uranium as an energy source

 

What does it mean when an energy source is renewable?

That means that a natural resource used for getting energy replenishes itself with time. Obvious examples that come to mind are wind, sun, hydropower, or geothermal energy sources.

We consider fossil fuels like oil, gas, or coal non-renewable because they take millions of years to form from the remains of ancient organisms and because there is a finite amount of them.

For the time being, experts also consider uranium to be a non-renewable energy source since a merger of neutron stars created it billions of years ago.

What does it mean when an energy source is sustainable?

That means that we can use said energy source for a certain amount of time and that it has a sufficient quantity for humans to exploit at an expected rate for the designated period.

Even though they are not renewable, both fossil fuels and uranium are very sustainable, with modern discoveries of new reserves that vastly exceed previous expectations and new technologies for extracting these materials. Namely, global gas reserves should last for at least 50 years. Likewise, we’ll have access to coal for the next 357 years, while oil stands at about 47 years left (at current consumption levels and excluding unproven reserves).

As for uranium, we have at least a 100-year supply at today’s consumption rate, but specific assessments give even more significant numbers of up to 200 years.

However, even if infinite amounts of fossil fuels were available, ozone, bees, forests, and clean water are not as inexhaustible. With pollution and the toxic effects of producing energy by burning carbon-based fuels becoming a pivotal problem of western civilization, uranium fuel has an apparent upper hand compared to gas, oil, and coal.

Benefits of uranium

Firstly, it’s becoming more and more eco-friendly (with nuclear waste becoming a usable material for further reactions) and, as technology advances, a number one option for keeping our environment clean.

Also, with previously explained revolutionary methods of getting uranium fuel from seawater and an impressive speed with which an economically stable solution is developing, the definition of uranium energy source as sustainable but non-renewable may be a thing of the past.

Suppose science can devise a method of extracting uranium from seawater at an acceptable price for the current market. In that case, we will witness the final achievement of humanity’s pursuit of infinite energy.

Nuclear power would become both sustainable and renewable. Combined with modern methods of producing energy within the neoteric reactors, we would operate an efficient system of getting power while preserving our planet.

The upper hand that uranium has over all other energy sources is – its’ bright future.

Investing in uranium stocks – growing demand as a significant factor

The prices of uranium stocks are already showing a growing trend, as well as the demand.

We divide growing demand factors into those currently taking place and those that are yet to come into play.

Several current geo-political events are vital for the growth of demand for uranium and nuclear-based energy.

Firstly, the US government’s significant increase in investments in mining uranium that began in 2020 has already made a slight movement on the uranium stock market.

Furthermore, as mentioned before, China’s aspirations for expanding nuclear potentials are more extensive than ever, with plans to increase the contribution of nuclear energy to its’ overall energy capacities by 10% in the next ten years. Thus, even though European governments are a little stagnant on the plans for new nuclear stations, the Chinese government alone makes up for it and will increase demand for uranium even further.

Steps towards the cleaner future

Additionally, the COVID-19 pandemic caused shutdowns created an extra push in demand for uranium, forcing governments to increase their funding for uranium mining operations.

Some factors that are sure to influence the overall demand for uranium are still to become fully revealed.

The growing electricity demand is by itself a factor to consider. But, along with the increasing electricity demand, concerns over the long-term implications of producing it by today’s methods are growing as well.

Steps towards a cleaner future that governments are taking have so far been a snake that’s eating its’ tale. For example, the ever-growing trend of producing electric cars has only done a disservice to its’ purpose of lowering toxic emissions since this created a greater electricity demand, thus increasing the activity of coal-based plants.

Even though resident Biden emphasized alternative fuels (an event that also accounts for a portion of the uranium stock price increase), some relevant authorities are still skeptical about shifting to nuclear-produced power. Nevertheless, it’s only a matter of time before a reality check.

Therefore, the negative narrative surrounding nuclear-produced power and uranium itself may be close to crumbling under the pressure of high demand for a fast solution to the energy problem, as well as an apparent lack of a reasonable argument for its’ existence.

Laptop screen with stock charts

 

Image credit: Jason Briscoe

Investing in uranium stocks – How to do it?

Acquiring physical uranium, as one might assume, is not possible due to its’ radioactive nature.

Instead of purchasing the commodity directly, investors must explore other options.

Mainly a) uranium stocks or b) exchange-traded funds (ETFs) that derive value from investing in uranium stocks.

Uranium stocks represent shares in companies in the business of either exploration, mining, or refining uranium.

Before deciding which stock to choose, the first important step is choosing and opening an account with a broker. A stockbroker is a company with authorization to buy and sell stocks on the investor’s behalf.

Once the stockbroker has provided the investor with a trading platform, they’ll be able to operate on the stock market.

Choosing the right stock depends on various factors.

Information about the company is crucial, as it enables the investor to make logical predictions for the movement of the bond prices.

Factors to consider

The location of the company dealing with uranium is one of the main factors to consider. The first reason is that the geography of said company’s mine will significantly affect the period between exploration, mining, production, and distribution of uranium. The second reason is the vast difference in potential risk between companies with a diversified mining operation, scattered across different uranium dig-sites, and those with a mining operation set up at a single location. If a company has a single concentrated operation, the risk of bankruptcy due to an unexpected accident is higher.

An increase in the price of bonds over the last year is a factor worth looking into. An investor would want to see a positive trend in how a company selling its’ shares is doing business.

Low debt and a positive cash flow are other decisive factors when looking for a stock to buy. The cash flow should be positive even when stock prices are low. For example, suppose there is a tendency to expand operations, and the company has enough capacity to support opening a second mine. In that case, that should be a positive sign for the potential investor.

In the case of companies where the cash flow is not favorable, investors should look into the earnings per share data (EPS). This information shows the potential investor the gradual progress of the company rather than its overall earnings. Likewise, if a company reduces its debt over time, that can also encourage the potential investor.

Top uranium companies

For those interested in investing in uranium stocks, there are various options. Here is a list of uranium companies we collected:

Cameco (NYSE: CCJ)

Cameco is the world’s largest publicly traded uranium company, based in Saskatoon, Saskatchewan, Canada. It came to life in 1987.

This company is currently in second place regarding the world uranium supply, and it produces about 18% of the world’s uranium.
The company’s mining operations are located in the U.S., Canada, as well as in Kazakhstan. This geographical position of the company’s uranium mining operation is a positive sign of its’ stability.
Not only are Cameco’s operations cleverly ‘scattered’, but they are also in every relevant uranium mining center in the world. Therefore, this instance creates a unique strategic resource regarding the company’s potential resistance to any unpredicted negative market changes.
The company controls eight facilities that run production operations, mining, milling, and uranium fuel creation.
Furthermore, Cameco has shown admirable resilience to the COVID-19 energy setback.
The uranium sector of Cameco contributed over 90% to its gross profit.

Company website: https://www.cameco.com/ 

Denison Mines (AMEX: DNN)

Denison Mines company logo

Denison Mines is a Canadian uranium exploration, development, and production company founded in 1985 with headquarters in Toronto, Ontario, Canada.

The company’s primary geographical focus is the Athabasca Basin region of Saskatchewan, Canada. However, the many projects of Denison Mines aimed at uranium exploration cover a vast geographical area of northern Canada. 

Exploring new uranium-rich sites can benefit uranium companies. For example, Denison Mines stock jumped more than 5% after the company announced that it had discovered new high-grade uranium mineralization at the McClean Lake.

The company is also in the process of mine decommissioning as well as environmental services.

Denison Mines is making efforts when it comes to environmental aspects of uranium exploration and mining.

Company website: https://www.denisonmines.com/

Lightbridge Corporation (NASDAQ: LTBR)

Lightbridge company logo

Lightbridge Corporation is a nuclear fuel technology development company based in the US state of Massachusetts and founded in 1992.

The company’s field of business can be appealing, as nuclear fuel technology has a vast potential to make significant breakthroughs. Furthermore, the main goal of the company’s involvement in technological advancement with regards to nuclear fuel is reducing any potential negative environmental impact of nuclear technology by improving uranium fuel.

Apart from dealing with technology development, the company also provides consulting services about nuclear energy to their potential investors.

As of May 11th, the company’s results for the first quarter of 2021 reported cash equivalents of $15.2 million, compared to $21.5 million in the preceding quarter. The drop in the company’s finances happened due to their investments in the research and development of uranium fuel.

Company website: ltbridge.com

Energy Fuels (AMEX: UUUU)

Energy Fuels company logo

Energy Fuels is a U.S.-based uranium mining company founded in 2006. Even though Energy Fuels is no longer a certified leader in the uranium mining endeavor, this company still represents one of the main producing leaders of the United States, holding three of America’s important centers for the production of uranium nuclear fuel.

The first production center, called White Mesa Mill, located in Utah, has a capacity of 8 million pounds of uranium’s isotope U308 produced per year. This center is the only conventional uranium-producing center.

The Nichols Ranch is a licensed production facility located in Wyoming, with a smaller capacity of 2 million pounds of the same isotope of uranium produced per year.

The third facility, called Alta Mesa, produces vanadium and is on standby at the present moment, but is an essential asset of the company and its’ plans.

The diversification of Energy Fuels into other rare metals might benefit the company in case of an unexpected event on the uranium market as the company could rely on its’ other endeavors.

Energy Fuels owns a series of other uranium and vanadium mines currently on hold and other projects currently in development.

Its’ headquarters are in Lakewood, Colorado, United States, and its’ revenue is 31.7 million US dollars.

Company website: https://www.energyfuels.com/

Ur-Energy Inc. (NYSE: URG)

Ur Energy company logo

Ur-Energy Inc. is a uranium mining company based in south-central Wyoming and is a newcomer to the uranium market. As a result, the company is somewhat smaller compared to some of the other competitors in the same business.

However, the company’s size is not necessarily its’ flaw, as Ur-Energy has accomplished astonishing results dealing with uranium, which led to great quarterly results four times in a row.

Ur-Energy has a total market capitalization of $243 million and big plans.

Company website: https://www.ur-energy.com/

Uranium Energy Corp. (NYSE: UEC)

Uranium Energy company logo

Uranium Energy Corp. is a company based in Texas, USA, that has dealt in mining and exploration of uranium since its founding in 2003. The company owns mining enterprises in multiple locations such as the United States, Canada, and Paraguay.

The company has a diverse operations model, holding stakes in several projects, Palangana, Burke Hollow, Workman Creek, and more.

Company website: https://www.uraniumenergy.com/

International Consolidated Uranium (TSXV: CUR)

International Consolidated Uranium company logo

This company was founded by the team behind NexGen Energy (TSX:NXE / NYSE:NXE) and Mega Uranium (TSX:MGA).

It’s a Vancouver-based uranium exploration company.

Company website: https://consolidateduranium.com/

 

Top ETFs that derive value from investing in uranium

Investing in ETFs is very useful as it diversifies the investor’s portfolio, keeping their investments ‘scattered’. However, it is never an excellent solution to invest substantial amounts of money that exceed the investor’s realistic financial capacity in a single company, risking significant losses in case of price declines.

If you are interested in ETFs, there are a few options to look at:

  1. Yellow Cake (YCA.L) – This company, residing in Saint Helier in the Bailiwick of Jersey, is a uranium-focused company offering options to deal with uranium without engaging in the process of mining or exploration. Yellow Cake was founded in 2005. It has six employees and a revenue of $1.000.000 (https://www.yellowcakeplc.com/).
  2. Global X Uranium (URA.P) – This company is a New York-based provider of global exchange-traded funds. It provides access to a series of companies involved with uranium mining or the process of making nuclear components and those involved with the manufacturing of the technological equipment for the uranium and nuclear industries. It was founded in 2008, has 114 employees and net assets of $729,337,707 (https://www.globalxetfs.com/funds/ura/).
  3. Geiger Counter Ltd (GCS.L) – This company is a London-based firm that focuses on investing in others who are either producing or exploring new uranium sites. (https://ncim.co.uk/geiger-counter-ltd/).

A part of a laptop screen with stock charts

 

Image credit: M. B. M.

Investing in uranium stocks – Conclusion?

There’s still a conclusion to be made. The stock market still waits for uranium to have its’ big break, but the odds could be in its’ favor. The contemporary aspirations of entire governments for creating a strict system of rules and regulations committed to preserving the ecosystem are still too young and a possible result of the ever-growing pressure of the media and the public for containment of pollution by the prominent manufacturers and multinational companies.

However, the time of hesitation is near its’ end, and we must find the solution. Alternatives to nuclear-based power production are close to zero. Germany and several European countries made the mistake of lowering the share of nuclear plants in electricity production to below 2%, all in favor of wind and sun-powered operations. The result was devastating. The power produced by these methods was too scarce. The operations had to be supported by coal-based plants, which created a counter-effect, further polluting the environment instead of making it cleaner and safer.

On the other hand, the technology surrounding uranium exploration, exploitation, and use as an energy source, constantly changes for the better.

The broader context

Different reactors, revolutionary methods of extracting replenishable quantities of nuclear fuel. What does all this information mean in a broader context of potential investing in uranium stocks? Well, it gives some reasons for optimism. We will meet the nuclear market’s demand for uranium fuel for the next 100 years. But relevant participants in the nuclear market and nuclear technology research are making significant strides to ensure the future of nuclear energy as a power source. They do this in quantity and quality by looking into new and more efficient ways to use and extract low-carbon fuels that have long-term reliability regarding taking care of the environment.

Furthermore, there isn’t a reason to assume that the demand for uranium isn’t going to rise in the future. The superiority of nuclear power in comparison to the current methods of gaining energy may become apparent to the most prominent skeptics among the elite. The obvious consequence would be the expanding replacement of fossil fuel-based operations with nuclear-based ones, which would increase the demand for nuclear fuel – the demand that future methods of extracting uranium could meet endlessly.

This instance would also open up further opportunities for science and technology to improve methods of extracting energy from other renewable sources and reduce the existing deficiencies of this technology – creating a world of clean air, bright lights, and inexhaustible power.

It’s only a matter of time before all the deciding factors realize that the next energy revolution is the nuclear revolution. Therefore, investing in uranium stocks can be a way to stay ahead of the game.

We encourage you to be aware of our disclaimer policy

 

This article was last updated on October 27, 2021

 

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