It’s safe to say there are a lot of different moving parts impacting financial markets at this time. For example, investors are trying to process the impacts of inflation, the Federal Reserve’s position on tapering, and whether or not the economic recovery is progressing. Then you have some truly eye-catching moves in the commodities market that are providing strong opportunities for profits. Surprisingly, gold isn’t a standout in this uncertain market environment. Instead, renewed interest in the radioactive metal uranium is providing some nuclear moves up for stocks that are involved in mining and producing the commodity.
Uranium, which is used to fuel nuclear power plants, is currently reaching the highest price levels since 2014 and could deliver additional upside in the coming months. Consider the fact that "dirty" energy costs are rising around the world and that more countries are interested in reducing their use of carbon-intensive energy sources, which are both trends that might benefit uranium prices in the long term. Additionally, a newly created fund called Sprott Physical Uranium Trust has been making huge physical purchases of the commodity and sending prices higher, which is another catalyst to monitor.
All of this means it might make sense to explore some of the most interesting names that offer exposure to uranium at this time, which is why we’ve put together an outline of 3 powerful uranium stocks to buy on dips.
Let’s start with Cameco Corp, which is the world’s largest publicly traded uranium company and a stock that has rallied over 82% year-to-date. Canada-based Cameco is one of the best picks for investors interested in exposure to the radioactive commodity, as its tier-one operations have the licensed capacity to produce over 534 million pounds of uranium concentrates each year. The company also has 455 million pounds of proven and probable mineral reserves and is a leading supplier of uranium refining, conversion, and fuel manufacturing services.
The investment thesis is fairly straightforward here – add shares of the bellwether company in the sector to take advantage of rising uranium prices and a broad secular shift towards cleaner energy sources. Additionally, Cameco is a company with a strong balance sheet, including $1.2 billion in cash and short-term investments as of June 30th, and pays out a dividend albeit with a tiny yield given the recent rally. The bottom line here is that Cameco Corp should be at the top of your list if you are interested in adding exposure to uranium
to your portfolio, just make sure to let the stock cool off and consolidate for a bit before adding shares.
Canada has the world’s largest deposits of high-grade uranium, which is why it makes sense to explore mining
companies with assets in the region. Nexgen Energy Ltd stands out as an intriguing mining company to consider adding if you are interested in a higher-risk way to play the rally in uranium prices, as it’s a company that owns a portfolio of prospective uranium exploration assets in the Athabasca Basin in Saskatchewan, Canada. Nextgen claims to own the largest development-stage uranium deposit in the world, which means the company has a chance to become a bigger producer of the commodity in the coming years.
The stock is hitting new all-time highs as uranium prices continue to show strength, and if the rally in the radioactive metal continues Nextgen Energy Ltd should provide nice gains for investors. Keep in mind that Canada is the second-largest producer of uranium in the world and accounts for roughly 22% of the world’s uranium output, which means that Nextgen has access to some of the best uranium mining assets out there.
If you are interested in an ETF that will limit your single-stock risk yet still allow you to gain exposure to uranium, the Global X Uranium ETF is a nice pick. This ETF
offers exposure to a ton of different companies that are involved in uranium mining and the production of nuclear components, including those in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries.
Some of the top components in the Global X Uranium ETF include Cameco Corp, Nexgen Energy LTD, and Denison Mines Corp. The fund has rallied over 77% year-to-date and also provides investors with a 0.62% dividend yield, which likely makes it one of the better options for investors who want to play the uranium rally. Just be careful adding into strength at this time, as uranium stocks have gone nuclear over the last few sessions and could be due for a pullback.
Before you consider Cameco, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Cameco wasn't on the list.
While Cameco currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.
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