Why Uranium Stocks Climbed Higher on Wednesday

Countries continue to commit to net-zero emissions by 2050, and nuclear power may be the only way to achieve that, sending uranium stocks climbing.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Published January 5, 2022 10:32 am EST

Uranium stocks including Cameco (TSX: CCO)(NYSE: CCJ) and NexGen Energy (TSX: NXE) continued to climb on Wednesday. Cameco stock reached 10% higher in early-morning trading, with NexGen adding another 12% after its climb the day before.

What happened?

There has been a lot of news coming in related to uranium stocks, affecting these massive uranium powerhouses. This includes a massive acceptance of the renewable power in Europe, followed by talks with Iran moving forward. That’s on top of the United States already stating it would spend money on nuclear facilities.

This led to some analysts renewing their targets for uranium stocks like Cameco and NexGen. Sprott Asset Management’s CEO John Ciampaglia recently stated the area should see “enormous growth” in 2022 and beyond.

And it’s not just countries getting on the energy product. Bill Gates and Warren Buffett recently announced a plan to build a US$1 billion reactor to replace a Wyoming coal plant. As the energy crisis continues in Europe, it’s likely even more countries will soon see an increase in the zero-emissions power generator.

So what?

In the last year, there has been a massive move towards going net-zero by around 2050 from countries across the world. Yet solar, wind, and other power operators continue to be secondary to oil and gas. Yet that’s simply not the case with nuclear power.

Nuclear is the only way many of these countries could even think about hitting these targets. This could create even more growth for uranium stocks, as the price of uranium climbs higher. China and India in particular, with their growing number of reactors, have contracts set to renew over the next few years.

Now what?

This next year could be an excellent time to invest in nuclear power. Both Cameco and NexGen remain below their target price. Yet as more news comes in about nuclear deals, that target price could continue to move higher and higher.

The only word of warning is that retail traders continue to be interested in uranium stocks as well. Until large financial institutions take a major stake in these companies, it’s likely that retail traders could move the uranium market as it did earlier last year.

That being said, if these uranium stocks remain under the target price, they’re a strong long-term hold. Since Fukushima, uranium stocks and prices have remained well below fair value. But with the shift to clean energy, uranium offers the only choice to reach net-zero targets — at least in the short term.