HomeCommodityInvesting in uranium - what is the future of uranium?

Investing in uranium – what is the future of uranium?

Investing in uranium stocks is very exciting for people who invest in commodity. Chemical elements are very desirable on the market.  Elements such as gold, copper, aluminum, uranium, and  platinum are used in industry, mechanics, or in energy production. Recently, we’ve seen a wave of people storing their money in the form of elements such as gold and silver. The COVID pandemic has affected many companies including Pfizer, Lufthansa, and American Bank, all of which are still struggling to restore the value of their products to what they were prior to the pandemic. 

What is the future of uranium? We don’t know, but If you are looking for a safe haven for your money, uranium stocks can be one. The demand for this commodity is rising even more, and uranium investors are gaining ground. Currently, there are over 30 countries with nuclear power plants, with many others under construction, all of which must be constantly supplied with uranium in order to function.  In 1986, Chernobyl led to the fall in demand of uranium and the cancellation of many projects but as we all know, the development of new technology can increase demand in a short period of time.   So uranium ETFs and stocks look good when market uncertainty increases. 

It’s very important to note that uranium has quite a few compounds: uranium trioxide, uranium hexafluoride and uranium dioxide; all of which have different prices and different demands. Depending on the structure, they can be used for the production of weapons or in the production of energy.

We have almost doubled our energy demand in the last 20 years, because governments are placing an increasing emphasis on green energy. Besides the energy from the sun, water and wind, we also have uranium. Although nuclear power plants account for only 10% of the world’s energy production, nuclear power is the most effective method of electricity production.

Interesting facts about uranium

To get to know the uranium market better, let’s start with some interesting facts about uranium.

Investing in uranium – stocks or ETFs? What should I choose? 

Research on the market shows that there are many advantages to investing in uranium. It is worth noting that there are more stocks on the market than ETFs. There are uranium companies located in the US, Canada, Namibia, Kazakhstan and Niger. When we look at the production of uranium per country we see that Canada and Kazakhstan are at the forefront of uranium production. It is in Canada that we find companies with the highest capitalization. It’s obvious that you can’t invest in actual uranium and store it by yourself because it is very radioactive but many brokers have company stocks or ETFs to trade. So uranium stocks or ETFs? In our opinion investing in ETFs is a safer option than investing in stocks because of diversification. 

Cameco Corporation – one of the biggest uranium companies 

This huge company produces 18% of the world’s uranium. They don’t have to worry about selling their product because they have contracts with 31 nuclear power plants in 4 continents. 

URA Uranium ETF 

If you want a uranium ETF with dividend this is for you. The dividend is very small, but 2-3% a year will cover inflation. Interestingly enough URA Uranium ETF includes not only uranium mining companies but also companies that produce components for nuclear power plants. Additionally there are a few companies that are devoted to extracting and refining uranium. If you had invested in URA ETF in the beginning of 2019 you would have had ~ -1.5%. As with most industries, of course COVID-19 has affected the uranium industry, leading to lower profit. That is why you should consider your options before investing in this ETF in 2020. If you have a lot of time you should analyze the companies in the URA index partially listed below.

URA Uranium ETF assets

One of these companies is Cameco Corp which accounts for almost a quarter of the index; additionally there are companies that are located in other countries. The index also includes very large international companies that produce components for nuclear power plants, such as Daewoo, Mitsubishi, Hyundai and Samsung. This ETF looks like a really stable ETF that could yield a profit over the next year.

Uranium penny stocks

While gold and silver stocks are already at a high price level there are many uranium penny stocks that can increase by 100-200% in just a few years. Of course we know that the uranium price on the market has a lot of political uncertainty but we believe that there is a big chance of growth. 

The penny stocks on our radar are cheap and have the potential to be profitable. Our ranking includes two penny stocks – Ur-Energy Inc. and Denison Mines Corp. Let’s see why they were included in our ranking. 

Ur-Energy Inc.

The current price is 0.80 CAD and if you had invested in Ur-Energy Inc in March of 2020 you would have gotten over 100% on your investment in just one month. This stock is very interesting because it is cheap and we know that on low price stocks there are fluctuations with high frequency. Of course day trading on uranium stocks isn’t a good idea but if a stock you are interested in currently has a low price, first thoroughly research the reason for the price; if the reason isn’t so dire, you may go ahead and invest in it. The rating for Ur-Energy Inc is set to buy.

Denison Mines Corp

The stocks of this Canadian company with a modest 70 employees are priced at 0.40 EUR The company isn’t hiding that there are problems due to COVID-19 and its plans for 2020 have been put off. Based on the financial report provided, its net loss in Q1 2020 is four times larger than Q4 2019. Remember that there are exploration expenses that are higher in Q1 and Q3. Should you buy Denison Mines Corp stock? In our opinion there is a good chance the price will rebound to what it was before 2018 so we advise you to take a chance on this stock. 

More information about the financial condition of Denison Mines Corp: the report of Denison Mines Corp

How to invest in uranium? Uranium stocks may not be the most popular stocks on the market but the above information shows us that we can count on profit on the uranium market. There are many uranium stocks on Stock Exchange and Exchange-traded funds with a group of given stocks. Is uranium a good investment? In these difficult times we are looking for a safe haven for our capital and uranium stocks can be it.

Jakub Borowiec
Jakub Borowiec
Financial markets enthusiast. I studied management at the University of Economics in Wroclaw.
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