What happened

Uranium stocks haven't had such a good run for several weeks now. On Wednesday, stocks across the board sizzled hot and rallied by double digits on the back of a development that could change the dynamics of the uranium industry.

Here's how much the top-performing uranium stocks had rallied at their highest points in the day through 1:30 p.m. ET Wednesday:

  • Energy Fuels (UUUU 7.88%): Up 18.8%.
  • Denison Mines (DNN 6.67%): Up 18.2%.
  • Ur-Energy (URG 3.49%): Up 17.4%.
  • Uranium Energy (UEC 6.30%): Up 14.4%.
  • Cameco (CCJ 6.46%): Up 13.6%.
  • NexGen Energy (NXE 4.99%): Up 13.1%.

This could just be the beginning of a fresh bull run in uranium stocks.

So what

On Wednesday, Japan's Prime Minister Fumio Kishida said the nation will take all possible measures to tide over the ongoing global power crisis and ensure energy security for years to come. The biggest part of the plan involves reviving nuclear energy, with Kishida planning to not only restart idled nuclear reactors but also build next-generation ones.

It's not an exaggeration when I say that this is one of the biggest developments in the nuclear energy industry in nearly a decade, and could be a turning point the uranium industry has waited for.

Japan was considered to be the focal point of a global nuclear energy boom until a deadly tsunami at the Fukushima Daiichi nuclear power plant in March 2011 forced the nation to shut down all of its 50 nuclear reactors. That closed the doors on the global nuclear power industry, and with it, the uranium industry, since nuclear reactors run on uranium fuel.

Japan has steered clear of nuclear energy since 2011 and relied primarily on coal and natural gas imports to meet energy needs. Nuclear energy provided just about 7% of the nation's electricity in 2021.

But with the war between Russia and Ukraine throwing the global energy sector out of whack, nations across the globe are scrambling to become self reliant. Clean energy is in focus like never before, and that includes nuclear power, which is currently the second-largest low-carbon source of electricity in the world today after hydropower, according to the International Energy Agency.

India, for example, is reportedly planning to build a mega-nuclear reactor as it strives to shift from coal to clean energy, according to a report from Bloomberg dated Aug. 24.

Japan has big plans: Extend the operating life of the 10 nuclear plants it has restarted since 2011, restart another 17 suspended nuclear power plants beginning next year, and build new nuclear reactors.

It reflects a marked shift in the nation's energy policy, and a resurgence of Japan's nuclear energy industry could alone bring back the golden days for uranium players. Investors recognize the massive opportunity here, which is why uranium stocks skyrocketed soon after Kishida's statements hit the headlines.

Now what

Just last week, investors were dumping uranium stocks after the world's largest uranium producer, Kazakhstan's Kazatomprom, revealed plans to increase production in 2024. Kazatomprom and other major global players like Cameco cut back production sharply in recent years to help balance demand and supply and support uranium prices.

Uranium prices have already cooled off substantially from their 11-year highs in March, and investors feared a rise in supply from Kazatomprom could throttle the market -- and uranium prices -- again.

That may not hold true anymore, as the long-term prospects for uranium stocks haven't looked this good in several years now.