The ugly-stepsister years for uranium could be coming to a close. “We’re sort of in kind of what feels like the early stages of a nuclear renaissance,” said Justin Huhn, publisher and founder of Uranium Insider. “The sector is set to grow immensely. There’s huge upside for the commodity itself. The equities are massively discounted.” The average price of uranium — which doesn’t trade on a public market like other commodities — gained 5.9% from the end of 2022 to the end of March, according to Cameco , a publicly traded producer that tracks average prices. Compared with May 2014, its lowest point in the last four years, the price has more than doubled. Uranium’s 2023 advance could be the start of a bigger positive trend for the once-disliked form of nuclear energy, experts said. And they’re optimistic about both the price of the commodity and the ways to invest in it, though the latter hasn’t reflected the bullish sentiment yet. ‘A very promising future’ The world needs around 180 million pounds of uranium to operate, which accounts for around one-tenth of global electricity and one-fifth of America’s, according to John Ciampaglia, CEO of Sprott Asset Management. But this year there will only be around 140 million to 150 million pounds produced because there isn’t enough idle capacity or new projects getting started as the industry exits a multiyear bear market. By 2040, he said demand could reach 250 million pounds. Part of that stems from China, India, France, the U.K., Canada and the Netherlands all showing interest in increasing nuclear capacity. Meanwhile, the U.S. Department of Energy said in a report released last month that uranium could be one nuclear power worth scaling to help the country reach its clean energy goals. About 70% of uranium is produced by state-owned or controlled companies in Kazakhstan, Uzbekistan, China and Russia, Ciampaglia said. But some in the U.S. and Canada are pushing to increase production in North America as part of the broader reshoring and near-shoring trend , especially in the wake of the Russian invasion of Ukraine. “Even though the market backdrop with interest rates and inflation and banking anxiety is creating a lot of anxiety for investors, investors feel very confident about uranium,” Ciampaglia said. “There’s a very promising future because the world is basically signaling that it wants to pivot back to nuclear energy.” That marks a turn from the bear market that ran from 2011 to early 2020 — a time when “nobody cared about it,” he said. The price was so low that some companies found such little upside to producing uranium that they left their mines idle. From January 2011 to January 2020, the average spot price calculated by Cameco dropped 66.1%. A structural supply deficit can be fixed by an increase in production, he said. But that will likely only happen when the commodity’s price rises enough to incentivize companies to raise capital. But despite the strong outlook for the commodity price, stocks and funds related to the commodity have not risen in lock step. The Sprott Uranium Miners ETF (URNM) and Sprott Physical Uranium Trust (SRUFF) are down about 7% and 4% so far this year, underperforming the broad S & P 500 , which has gained 6.5% . The Global X Uranium ETF (URA) has also lost around 5% since 2023 began. Huhn of Uranium Insider said that’s largely because the industry is so small that it’s especially difficult to move higher in a risk-off investing environment. How to play Still, Huhn said there’s likely upside ahead for both the commodity and the related stocks. He said the Sprott Physical Uranium Trust is a smart play because it has the best risk-to-reward ratio in his eyes and has the benefit of holding actual uranium as opposed to just mining stocks. Many family offices have sold their physical uranium for holdings in the Sprott trust. “Having some elements of your uranium allocation in the physical commodity itself is probably a smart thing to do, because it’s so much less risk,” Huhn said. “You’re just betting on the commodity going up, and that’s probably the easiest bet I’ve ever made in my life.” The company also manages the Sprott Uranium Miners ETF, which Huhn said has a larger emphasis on the mining stocks than the commodity price. Elsewhere, there’s the Global X Uranium ETF. In terms of individual holdings, Huhn said uranium miner Cameco is particularly popular and “catbird seat” scenario after entering into an agreement to take 49% ownership in Westinghouse Electric. He called the deal a “huge play on the future of nuclear.” He said Kazatomprom , one of the world’s largest producers, is a value play. But he did note some jurisdictional risk as Kazatomprom is Kazakhstan’s national operator. CCJ NATKY,GLATF YTD mountain Cameco, Kazatomprom and Global Atomic Internationally, Huhn pointed to Yellow Cake PLC , which can buy uranium directly from Kazatomprom each year. He also pointed to the Zuri-Invest Uranium Actively Managed Certificate in Switzerland, which is not publicly traded but can be acquired and sold through a brokerage. Zuri-Invest’s option is unique because it has a shorter settlement time and can be redeemed for either money or physical uranium, Huhn said. While he doesn’t give official stock picks outside of his newsletter, one stock Huhn said he would be watching as a retail investor is Global Atomic . While there’s some risk given where the company is based, he said it’s capitalization isn’t too small to be overly volatile. He also said it’s one of a handful of companies in a “sweet spot”: they aren’t producing yet, but could be by the next bull market. More broadly, hethan said retail investors should look for opportunities to avoid leverage and buy in multiple places while others are still skittish on adding risk to portfolios. “Enter into positions in multiple tranches,” Huhn said. “We reiterate that over and over and over because a lot of times you can kind of chase this stuff when it’s trading at a near-term high — when everything’s euphoric — but the market almost always gives you a better opportunity if you’re patient.”
