Nuclear energy is a domain that has been widely discussed in the prior decades. Whilst some had maintained that it is a revolutionary idea in the context of the clean energy transition, others insisted that it is a hazard best avoided. The recent energy crisis across the globe has once again brought nuclear into the spotlight. Europe’s dependence on the Russian gas supply has exposed the continent to a critical vulnerability that has caused EU lawmakers to accept the superiority and sustainability of nuclear energy. Uranium, in particular, a commodity that is vital in the production of nuclear energy, seems to show immense promise in the future outlook of the world. Economists expect a nuclear breakthrough to be imminent, which could cause Uranium prices to surge. For investors seeking an early position in the upcoming nuclear shift, we present the top 5 most promising Uranium stocks to buy.
Up first is the uranium industry’s star player, Denison Mines Corp. (AMEX: DNN), which is based in Canada. Denison Mines is essentially a holding company that holds within its portfolio some of the most strategic mining assets of the Athabasca Basin, in Canada. Athabasca is renowned for possessing the highest grade of uranium in the world, whilst having stored in its mines a fifth of total global uranium reserves.
Specifically, Denison holds a 95% ownership stake in the Wheeler River project, which holds a capacity of delivering 6 million pounds of uranium per annum for the next 10 years. It also holds a 70% stake in the Waterbury Lake site project which is capable of delivering uranium output of almost 10 million pounds a year, for the next 6 years.
Apart from holding such lucrative uranium assets, Denison also possesses significantly large quantities of stored ores. Its ownership stake in various joint ventures further boosts its net asset value. The company’s liquidity profile is further supported by its holding of Uranium securities, through which it is able to fund further development and exploration. All these various holdings deliver Denison a heavy boost. Last year as Uranium prices soared, Denison delivered its highest ever revenue figure of $20 million.
Denison has laid out all its cards to brilliantly take the lead in the uranium sector and secure its place in the top 5 uranium stocks. It stands optimally positioned to gain big as the wider industry approaches more favorable market conditions.
Next up on our list of top 5 uranium stocks is yet another Canadian stock from the uranium sector, Cameco Corporation (NYSE: CCJ). Cameco is a uranium giant, with a market capitalization standing at $10.5 billion.
Cameco stands poised to win big in the short term, given the position it occupies in the global markets. With assets owned in Canada, the United States, Australia, and Kazakhstan, no company understands the Uranium supply chain better than CCJ. Through this approach, it is committed to a strategy of capturing full-cycle value, through increased demand of electricity for the growing global population.
With a renewed global focus on electrification and decarbonization, Cameco Corporation comes up as the most significant name to take the lead. Its competitive edge is that the uranium it supplies is of the enriched, rather than the regular class. This feature alone puts Cameco on the verge of an epic growth tale. With the Biden administration seriously considering sanctions on Russian-produced uranium, which supplies a fifth of all uranium to American power plants, few suppliers of enriched uranium stand to meet the task. Cameco however, seems optimal for this transition away from a dependence on Russian uranium. Cameco holds the perfect balance of low-cost, enriched uranium, as well as the supply-side flexibility to meet the demand of the US utilities sector. This is not a stock any uranium growth chaser would want to miss out on.
Uranium Energy Corp
Up next, we present the small, yet highly promising, Texas-based uranium company, Uranium Energy Corp. (AMEX: UEC). UEC may perhaps be the boldest choice on this list of top 5 uranium stocks, given its high risk-reward profile. Unlike other stocks on our list, UEC is not technically a Uranium mining company. With zero production of the critical commodity, UEC has barely managed to generate revenue as of yet. Despite this, however, the stock stands to possible sky-rocket in the near future.
UEC’s business strategy entails buying up uranium at spot prices, with the anticipation of reselling upon a price surge of the commodity. Some might rightfully call such an approach, one that is based on speculation. However, a recent development significantly shifts the dynamics in favor of UEC. The company acquired Uranium One, which is the world’s fourth-largest producer of Uranium, for nearly $120 million. It is also under the control of Russia’s State Atomic Energy Corporation. Uranium One owns multiple uranium resources around the globe, including in the US, with an approximate annual capacity of 2.5 million pounds of uranium. This would result in an instant revenue surge from the ground up.
Each of these factors collectively makes UEC a great uranium stock to buy. Its spot purchase approach for future sales continues to hold high-profit potential. With its recent acquisition, its financial sustainability has seen a massive jump, now that the company can get in revenue.
BHP Group Ltd
The fourth stock on our list is the metal and mining mammoth, BHP Group Limited (NYSE: BHP). In addition to uranium, BHP operates through multiple segments that include petroleum, copper, iron ore, as well as coal. The company, which holds a valuation of almost $130 billion is one of the largest names in the resources market, which supplies to markets on every continent.
BHP is a great pick because it could see sustained growth with the anticipated resurging demand for uranium amidst the present global energy crisis. With its vast diversification in the metals business, its risk would remain relatively low in comparison to some of the other stocks we have listed. These characteristics make it ideal to buy and hold in the long term. With favorable conditions in the uranium market, BHP could see impressive value addition. However, even if things play out the other way, the company would remain profitable through its other business segments.
What’s most impressive about the stock is its valuation metrics. In the recessionary mass sell-off, BHP has fallen by over a third of its share price of a year ago. This makes the stock extremely attractive to buy right now and falls on the list of top 5 uranium stocks. Moreover, its dividend yield has been bumped up to 14%. This is a golden investment opportunity for anyone to consider, whilst remaining safely exposed to the potential gains of uranium.
The final stock on our list, yet far from being the least is Ur-Energy Inc. (AMEX: URG). Ur-Energy is a company that has made significant progress in the Uranium markets. This year, in particular, had been stellar for the company, where uranium prices hit a 10-year high. URG had also steadily improved its liquidity and balance sheet, as a result of this enhanced profitability.
Through its impressive inventory levels of uranium, Ur-Energy stands perfectly positioned to win big in the present global energy crisis. Its performance over the years has substantially boosted its financial sustainability and thus improving its standing amongst market participants.
What remains most impressive about the company is its Lost Creek project in Wyoming, which it aims to restart this year. The net present value of the project stands at a whopping $200 million. To put this figure into context, URG holds a market capitalization of a mere $230 million.
The output of this project alone would allow URG to achieve operational leverage, whilst ensuring its financial prospects are further boosted. Due to these features of the company, URG is a stock among the top 5 uranium stocks which cannot simply brush aside.
The world is gradually falling back in love with nuclear energy. Although this was previously discussed in the context of decarbonization, the present global energy crisis has truly thrust nuclear into the limelight. Uranium stocks for this reason are ideal to consider for those that seek early gains on this potentially revolutionary stock category. Each of the stocks mentioned in this article holds unique core strengths that make them suitable to include in one’s investment portfolio.