Forget about 2007, when uranium prices spiked above $130 a pound, that price will not be seen again anytime soon. Today, the spot price of uranium is about $28 a pound, a horrendous level undreamed of even a few months ago. From a price in the low $70s in the months leading up to Japan's Fukushima accident in March 2011, the uranium spot price is down about 60%. As a result of that terrible incident, Japan's 50 nuclear reactors remain offline to this day, causing severe oversupply of uranium in the market. 

Uranium companies have felt the pain...Soon, a gain?
While the spot price languishes below $30 a pound, the long-term contract price for multi-year contracts signed between utilities and uranium producers held up better at $45 a pound. Still, uranium players are mostly built to play with more than $60 a pound uranium prices. The costs of mining and processing uranium to sell into utility contracts has not fallen along with the uranium spot price. 

Companies like Cameco (NYSE:CCJ), Areva (NASDAQOTH: ARVCF), Denison Mines (NYSEMKT:DNN), and Uranium Participation Corp (OTC:URPTF) have had a tough time, especially compared to the booming S&P 500. Uranium Participation Corp is unique. It's not a uranium miner like the others, but an investment vehicle that owns physical uranium inventory. The stock is trading at a premium to its net asset value. I'm not a fan of this one.

Cameco and Areva are giants and industry leaders. These two would be huge beneficiaries once uranium prices rebound, but the question is, how soon might prices recover? Some pundits have been calling for a rebound for over a year, yet the spot price is at an eight-year low. Cameco, with a market cap of $7.6 billion, is one of the few vertically integrated players. It produces close to 15% of global supply and dominates the single best uranium mining jurisdiction in the world -- Saskatchewan, Canada. Denison is an up-and-coming explorer and developer, also in Saskatchewan. It has very prospective uranium properties, but no production to speak of. It's a high-beta uranium play. 

Like Cameco, France-based Areva is a monster of a company. Unlike Cameco, Areva has far-flung operations in countries like Niger and Namibia in Africa. These operations have been hurt by mining cost inflation and troubles with locals and government officials. Areva's problems in Africa are indicative of future supply challenges facing the global uranium market. It's certain uranium prices will move higher, but when? 

All eyes on Japan, 50 reactors down
All eyes are on Japan where 50 nuclear reactors are not operating. That's about one eighth of the global fleet. Investors and industry experts had expected a handful of reactors to be back online by now, but delays continue. Even a small number of Japanese restarts could be the spark that gets the uranium spot price moving again. In the past, the uranium spot price has been known to move both up and down by large amounts when fundamentals turn. 

Bottom line
Uranium is certainly a contrarian play right now, but is it a good bet to make? In order for investors to make a contrarian bet, the potential reward should be large. In the case of uranium stocks, the main risk is not if uranium prices will rebound, but how soon. I believe the spot price will remain depressed for at least the next several months. Therefore, in my opinion, there's no rush to get in now. Cameco will be a good way to play uranium when the spot price begins to move.