Please ensure Javascript is enabled for purposes of website accessibility

Why Uranium Stocks Popped Monday

By Rich Smith - Updated Apr 5, 2021 at 4:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

All of a sudden, nuclear power is glowing green.

What happened

Uranium stocks went nuclear on Monday, with shares of Denison Mines (DNN 5.50%) surging 10.2%, Uranium Energy (UEC 5.52%) rising 10.6%, and Energy Fuels (UUUU 7.09%) closing 14.3% higher.

It's not hard to figure out why: Uranium prices are way up.

Cartoon picture of two nuclear reactors generating steam in dark shades

Image source: Getty Images.

So what

As OilPrice.com reported over the weekend, the spot price for U308 (triuranium octoxide, also known as yellowcake, and the most stable form of uranium oxide found in nature) last week surged past $30 per pound for the first time this year, approaching its highs of last year.

Investment banks BMO Capital Markets and Morgan Stanley both believe that uranium prices have set a floor, and are unlikely to fall back below $30. To the contrary, the analysts are predicting that uranium will continue to rally, and could hit $50 by 2024.

The reason: According to energy experts, it's unlikely that the Biden Administration will be able to succeed in its goal of converting America's economy to clean electricity without building more nuclear power plants and feeding them with uranium. Moreover, experts for the European Union are also said to be advising EU governments to classify nuclear energy as sustainable, and thus qualifying for investment as a form of green energy.

Now what

Nor does the good news stop there. Last month, China unveiled its 14th five-year economic plan, which includes plans to increase nuclear power capacity from 48 gigawatts presently, to 70GW by 2025.

With 50 new nuclear power plants under construction around the world already, and more on the way, demand for uranium is predicted to rise over time. Meanwhile, production at some major mines is currently either shut down entirely or temporarily suspended due to COVID-19, creating a supply-and-demand imbalance that is working to push prices higher. Investors are betting that uranium mining stocks like Denison, Uranium Energy, and Energy Fuels will benefit -- and they're probably right about that.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Uranium Energy Corp. Stock Quote
Uranium Energy Corp.
UEC
$3.63 (5.52%) $0.19
Denison Mines Corp. Stock Quote
Denison Mines Corp.
DNN
$1.15 (5.50%) $0.06
Energy Fuels Inc. Stock Quote
Energy Fuels Inc.
UUUU
$6.34 (7.09%) $0.42

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.