What happened

Uranium stocks shot for the moon last week, but investors who know why these stocks jumped were likely expecting to see bigger gains. They're already in for some luck: Uranium stocks rocketed even higher today, with most stocks jumping double digits. Here's how some of the hottest uranium stocks were faring as of 1:40 p.m. ET Monday:

  • Denison Mines (DNN 0.50%): Up 15.7%.
  • Centrus Energy (LEU 1.52%): Up 15.7%.
  • Uranium Energy (UEC -1.92%): Up 14%.
  • Energy Fuels (UUUU -9.25%): Up 11.9%.
  • Ur-Energy (URG -2.37%): Up 11.6%.
  • NexGen Energy (NXE 1.18%): Up 11.2%.
  • Cameco (CCJ -1.68%): Up 10.2%.

As I hinted last week, the rally in uranium stocks may have just begun.

So what

If Japan sent uranium stocks into a tizzy last week, it's Europe today. And Elon Musk.

In an unprecedented development, Japan is giving its nuclear power industry a fresh lease on life. It's an inflection point for the uranium industry. Japan was a key consumer of nuclear power until 2011 when it shut down all nuclear reactors in the aftermath of the deadly Fukushima Daiichi disaster. That also shut the doors on the fortunes of the global uranium industry, since nuclear reactors run on uranium fuel.

Now dealing with sky-high prices of fossil fuels and a global power crisis, Japan wants to secure its future energy needs and, therefore, announced last week that it'll restart several idled nuclear reactors and even build new ones.

Now, Europe is rolling back on its plans to shut down nuclear reactors to tide over an acute shortage in the supply of oil and natural gas from Russia, according to The Wall Street Journal. Belgium is reportedly extending the life of two of its reactors by 11 years, while Germany is rethinking its decision to shut down all reactors by the end of 2022 amid a gas shortage. Earlier this year, France announced plans to build 14 nuclear reactors starting in 2028.

Elsewhere, India's largest power company is reportedly planning to build a massive reactor, according to Bloomberg, as the nation strives to expand the share of clean energy in power production.

Long story short, major nations are now rethinking their energy policies, and nuclear energy is a key part of the equation everywhere. Greater consumption of nuclear power is pretty much all that's required to drive the demand for uranium higher and turn around the fortunes of uranium miners, which is why uranium stocks are on fire today.

Electric vehicle giant Tesla's CEO Elon Musk further added fuel to the fire by speaking in favor of nuclear energy.

Musk is a strong advocate of nuclear energy and has been backing the need for more nuclear power stations for several months now. This past weekend, he tweeted about how important it is for countries to increase nuclear power generation.

Now what

Until now, any rise in uranium prices was considered a dead-cat bounce. That may not be the case anymore. The thing is, the thesis for investing in uranium stocks revolves entirely around the nuclear energy industry, and that thesis appears to be finally playing out after a lull that lasted more than a decade. With nuclear power now expected to play a greater role in the global transition from fossil fuels to clean energy, the demand for uranium, and therefore prices, should stabilize.

Some investors might be worried that rising demand for uranium could trigger miners to boost production and supply and put an end to the knee-jerk movements in uranium prices and uranium stocks that took place over the past year or so. However, a stable commodity market is far more imperative for shares of uranium companies to maintain their momentum in the long term, whether they're established players like Cameco or promising young miners like Uranium Energy.