The uranium industry already has a lot going in its favor right now. The Sprott fund is purchasing hefty amounts of uranium, and more world leaders are recognizing the viability of nuclear power. Uranium is a key fuel as an alternative source of energy. At the beginning of the new year, we have some exciting uranium stocks that you can keep on your watchlist and buy.
The demand for uranium has increased significantly in the past few months following the skyrocketing energy prices. After a recent global climate summit, the global community has shown interest in the use of uranium as an alternative to oil and natural gas. We can expect 2022 to be the year for uranium stocks, based on how things are shaping up.
We have compiled the five best uranium stocks to buy in 2022.
Cameco Corporation (CCJ)
Cameco Corporation (CCJ) operates worldwide in the production and sale of uranium. It’s one of the largest companies in the market today. The company operates in two segments, Uranium and Fuel Services.
Cameco has been suffering from supply constraints in the fuel sector. However, the company can bear strong demand effects. Focusing on its uranium segment, Cameco was among the first uranium miners to curtail production dramatically over the past couple of years. That helped in easing oversupply concerns in the uranium market and supporting uranium prices. This move was applauded by other players in the uranium industry.
This operational flexibility, alongside strong financials, are huge competitive advantages to have. Especially, at a time when the uranium industry is at an inflection point. Uranium prices touched nine-year highs in September 2021. That was after the Sprott Physical Uranium Trust Fund aggressively mopped up uranium from the spot market.
For Cameco, the spot market isn’t the real business driver. The real focus lies on long-term contracts from utilities. But with supply in the spot market thinning, utilities are back to negotiating uranium contracts. That’s boosting long-term uranium prices to remain higher. According to data from Cameco, long-term uranium prices jumped almost 25% between August and October last year.
With the current situation of the market, CCJ stock can be a great investment in the uranium stock sector.
Denison Mines (DNN)
Denison Mines (DNN) operates as a uranium exploration and development company in Canada. With the overall uranium market picking pace, DNN could be a winner.
Denison Mine could be a solid choice for investors as Zacks has upgraded it to a strong buy. The upgrade on stock is based on an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.
The company has been doing well and in the last quarterly outcomes, DNN mentioned some key developments. Denison made the successful completion of In-Situ Recovery field, ISR, test activities at Phoenix. In September 2021, the Wheeler River Joint Venture, WRJV, approved the initiation of an independent feasibility study for the ISR mining operation proposed for Phoenix. The completion of the feasibility study is a critical step in the progression of the project between both parties.
Prior to the developments in Phoenix, in August, Denison completed the acquisition of 50% of JCU Exploration Company from UEX Corporation. JCU holds a portfolio of 12 uranium project joint venture interests in Canada. That’s a major development for DNN as the market is surrounded by a strong upthrust force.
Denison with its current developments looks to be in a great position to move along with the market. Therefore, in the category of uranium stocks DNN stock could be a good buy in 2022.
Centrus Energy (LEU)
Centrus Energy (LEU) supplies nuclear fuel and services for the nuclear power industry across the globe. However, the stock price is trading around its average zone of the last 12-months period.
LEU is profitable and looks sound to run its operations considering the rising momentum of the market. In the last quarter, the company posted stellar outcomes. Centrus reported an earnings surprise of 192.59%. It was expected that the company would produce $0.27 per share when it actually produced earnings of $0.79. Over the last four quarters, LEU has surpassed consensus EPS estimates four times.
The net income also improved, taking things to profitability. The net income of $42.1 million for the quarter ended September 2021, increased from a net loss of $7 million, from a year ago.
The company hinted that they were focused on pioneering the emerging market for HALEU, winning new sales, and delivering strong margins. The next earnings report is pending and if the company scores well, which it is expected to, things look good for LEU stockholders.
Moreover, Centrus is working on its High-Assay, Low-Enriched Uranium demonstration program and has positive momentum in its LEU segment. So, keep LEU under your watchlist this year when you are looking for uranium stocks to invest.
Uranium Energy (UEC)
Uranium Energy (UEC) is perhaps the boldest uranium stock pick on our list because, unlike Cameco which is an established uranium miner, Uranium Energy hasn’t generated any revenue since 2015. So why do we have our eyes on Uranium Energy shares? In one word: acquisition. Let’s get into this.
In 2021, the company didn’t produce uranium but bought a heavy amount of instead buying yellowcake from the spot market in a bid to sell it later. Now that’s a move based purely on speculation about spot uranium prices, and not the kind of business strategy to put your money on. But Uranium Energy made a massive move acquiring Uranium One, the world’s fourth-largest uranium producer that’s controlled by ROSATOM.
The $112 million cash acquisition includes production-ready assets in Wyoming’s Powder River Basin. That includes one of the largest uranium processing facilities in the U.S., having an annual licensed capacity of 2.5 million pounds of uranium. This acquisition means, revenue generation for Uranium Energy.
Moreover, the company doesn’t need to build a plant at its Reno Creek project anymore given its proximity to Wyoming assets. That would save a lot of capital that UEC can use elsewhere.
Uranium Energy has positioned itself to secure utility contracts from both Texas and Wyoming. As far as the capacity is concerned, UEC uranium stock looks a good buy and that’s what makes it a prime uranium stock on the market.
Ur-Energy Inc. (URG)
Ur-Energy (URG) is not the best option at the moment. However, the potential to make a profit from URG is still there. Based in south-central Wyoming, Ur-Energy is a relatively new company that’s smaller than other uranium companies.
Though it’s small in size, the company has a 2.3 million pound-per-year capacity for uranium and can increase to full production in as few as nine months. As of Oct. 2021, Ur-Energy had 285,000 pounds of uranium inventory, but management stated it doesn’t expect to sell any of that uranium over the next 12 months.
At the end of the third quarter of 2021, 6 hedge funds in the database of Insider Monkey held stakes worth $14 million in URG uranium stock, compared to 4 in the preceding quarter worth $8 million.
You need to follow what the company has to say during 2022 and invest based on the developments. Rising prices could give Ur-Energy a nudge toward stepped-up production and share prices. In the meantime, analysts’ earnings projections say EPS could triple in 2023.