4 Stocks To Play The Nuclear Energy Boom: Denison Mines, Ur-Energy, Cameco, And NexGen Energy

NYSE: CCJ | Cameco Corporation  News, Ratings, and Charts

The energy sector has been witnessing a slow but steady transformation as climate change has become an increasingly pressing concern worldwide.  Global leaders are investing again in nuclear energy to protect the planet by cutting the greenhouse gas emissions that emanate from burning fossil fuels. Consequently, utilities around the world are increasingly relying on nuclear fuel products.

The United States is the world’s largest nuclear power generator, accounting for more than 30% of global nuclear power. In fact, it accounts for 20% of America’s total electrical output and remains the most efficient power source available. Uranium is a key element in carbon-free nuclear electricity generation. The $15 billion uranium mining industry fuels reactors globally, which are said to remove more than 250 billion tonnes of CO2 per year.

Unlike other commodities, uranium has been in a prolonged bear market. Significant mine shutdowns because of low uranium prices and increasing production costs have caused a primary-supply reduction of more than 35% over the past four years. The COVID-19 pandemic has also caused significant supply disruptions, necessitating higher-than-anticipated inventory drawdowns. However, with the construction of more nuclear power plants around the globe and the emergence of new safer technologies, uranium may be poised for a multi-year bull run.

The Biden administration might further mitigate the need to stock up on uranium deposits for defense purposes because the President is forging trade deals with Russia and China to help hit his goal of global net-zero carbon emissions by 2050. Russia and the United States yesterday agreed to extend the  New START nuclear arms control treaty, which limits the number of strategic nuclear warheads, missiles, and bombers that both parties can deploy.

In addition, the recently passed Energy and Water Development and Related Agencies Appropriations Act, 2021 sets the stage for the Department of Energy (DOE) to shore up domestic production of uranium, including a national uranium reserve. This is occurring at a time when there is growing uncertainty and risk around global uranium supply.

Global changes in the regulatory environment will accelerate the pace toward a carbon-neutral world, and companies dabbling in the clean energy space will receive a major boost.

Given this favorable backdrop, we believe uranium-producing majors Cameco Corporation (CCJ - Get Rating), NexGen Energy Ltd. (NXE - Get Rating), Denison Mines Corp (DNN - Get Rating), and Ur-Energy, Inc. (URG - Get Rating) will likely see immense growth in their business.

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William K. 1 month ago Member's comment

This is interesting, especially in the light of what I had thought was an anti-nuclear power movement. So either the naysayers have changed their tune, or are being ignored.

Certainly there is a need for much more wisdom than we saw used for that Fukoshima power plant in Japan, whose grossly inadequate cooling arrangements lead to a disaster.

And given the limited number of players on the uranium supply side, certainly the ones doing well would be a good investment.