It’s been a bumper week for uranium stocks, with shares of Uranium Energy (NYSEMKT: UEC) and NexGen Energy (NYSE: NXE) clocking some of the biggest gains in the industry. While Uranium Energy stock surged 19.1% at its highest point in trading during the week through noon Friday, shares of NexGen Energy jumped 16.3% at its highest, according to data provided by S&P Global Market Intelligence.
Uranium prices just hit levels not seen in 12 years, and investors don’t want to miss the boom.
Uranium prices crossed $60 per pound on Sept. 15 for the first time since 2011 when the deadly Fukushima Daiichi disaster drove the global uranium industry into limbo. With more nations turning to nuclear energy as they transition from fossil fuels to cleaner sources of energy, demand for uranium — a key fuel for nuclear reactors — is expected to rise.
In its latest biennial report published this month, the World Nuclear Association (WNA) projects demand for uranium to surge to nearly 130,000 tons, or roughly 285 million pounds, by 2040, or nearly double the 2023 demand estimate.
The war between Russia and Ukraine, in particular, has been a powerful catalyst for nuclear energy as economies worldwide are now looking to diversify their fuel options to reduce reliance on oil and gas imports from countries like Russia. Meanwhile, the recent military coup in Niger, West Africa, poses a threat as Niger supplies 5% of global uranium. This comes at a time when fears of the U.S. imposing sanctions on uranium imports from Russia are already looming large. Russia is one of the world’s largest suppliers of uranium.
In short, potential supply risks, coupled with a potential rise in demand, are sending prices of uranium soaring to multiyear highs.
With uranium prices hitting multiyear highs, it’s not surprising to see uranium stocks rising. Uranium Energy’s revenue, in particular, is pegged to uranium prices as whatever little revenue the company is generating currently is coming from the sale of uranium that it bought earlier at spot prices. The company, however, has also made several acquisitions in the past year or so to build its resource base that can eventually produce uranium. Analyst Craig Hutchison from TD Securities also started coverage on Uranium Energy stock this week with a speculative buy rating and a price target of $6 a share. NexGen Energy, meanwhile, is developing its first mine known as the Rook 1 Project in Saskatchewan.
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