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.

| More on:
Hand arranging wood block stacking as step stair with arrow up.

Image source: Getty Images

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Energy Stocks

A person builds a rock tower on a beach.
Energy Stocks

CPP Enhancement: Here’s How Much Your Benefits Could Increase

You may or may not receive higher CPP benefits thanks to CPP enhancement. You can receive passive income from Fortis…

Read more »

Gas pipelines
Energy Stocks

Should You Buy Enbridge at These Levels?

Given its stable financials, high dividend yield, and healthy growth prospects, Enbridge would be an excellent buy at these levels.

Read more »

tsx today
Energy Stocks

TSX Today: What to Watch for in Stocks on Tuesday, September 26

Weakness in commodity prices could pressure the TSX index at the open today, as investors closely monitor the important U.S.…

Read more »

Businessperson's Hand Putting Coin In Piggybank
Energy Stocks

This 7 Percent Dividend Stock is My Top Pick for Immediate Income

Looking for a solid dividend stock that can provide an immediate income source? Consider this dividend gem now while its…

Read more »

oil tank at night
Energy Stocks

The Best Canadian Energy Stocks to Buy for Dividends

Even growth investors will want to have these high-yielding energy stocks on their watch lists.

Read more »

tsx today
Energy Stocks

TSX Today: What to Watch for in Stocks on Friday, September 22

With its over 4% week-to-date losses, the TSX Composite seems on track to deliver its worst weekly performance in about…

Read more »

oil and natural gas
Energy Stocks

2 Top Canadian Energy Stocks to Buy Right Now

Here's why Suncor (TSX:SU) and Enbridge (TSX:ENB) are two top energy stocks investors can buy today and hold for a…

Read more »

A solar cell panel generates power in a country mountain landscape.
Energy Stocks

2 Renewable Energy Stocks That Could Put You in the Green

There's no shortage of renewable energy stocks to add to your portfolio. Here's a duo that will point your portfolio…

Read more »