Investors continued to feel the power of uranium stocks, with the sector seeing strong results in 2023. That’s saying something, as the market at large continues to wax and wane, as inflation and interest rates still put pressure on stock performance.
However, uranium stocks are a different story — one of superior growth. Let’s look at why uranium stocks could climb even more in 2023 and one option to consider.
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That old problem
If people are digging for gold, sell shovels. It’s an old adage that rings true now, with uranium providing the power behind the world’s renewable energy transition. While uranium power may not be the be all, end all solution, it’s certainly a strong source to get climate change and fossil fuel emissions under control.
Supply and demand fundamentals have already seen improvement in 2023, and continued to improve during the second quarter. With the acceptance of nuclear power climbing around the world, wanting out from climate change and Russian dominance in Europe, energy needs are shifting towards nuclear power.
During the second quarter, uranium prices traded at or above the US$50 per pound level. Currently, the price of uranium has surged to US$56 in June, a 39% increase year over year and 29% in the last month alone!
Is more growth coming?
As mentioned, tight supply and large demand continue to put pressure on uranium suppliers. This pressure has resulted in high prices for the fuel, with analysts stating they would be surprised if the price fell back at all.
For the remainder of 2023 then, it looks clear that uranium prices and uranium stocks should continue to either remain stable or indeed climb — especially as more companies and governments make partnerships with nuclear power producers around the world. So, while 29% growth month over month is impressive, some analysts believe that’s only the beginning.
If that’s the case, one of the best uranium stocks to consider is Cameco (TSX: CCO).
Why Cameco stock?
Cameco stock is the world’s largest publicly traded uranium producer, and it’s finally seeing the attention it deserves. The company reduced production of uranium to keep prices up over the last few years, keeping a large store of the fuel available. Now, Cameco stock is making its way through those reserves and working on creating more.
But not too much. After all, as mentioned, the company wants to keep these uranium prices elevated. As with the oil and gas industry, supply and demand will keep prices up. With too much supply with not enough demand, all this growth goes away.
Still, for long-term investors looking at investing in uranium stocks, Cameco stock seems like perhaps the best option out there. It’s large with a market cap at $19.22 billion, yet continues to grow making partnerships around the world. And with the world looking to go nuclear, it’s likely to be the first stop for partnerships, especially with Russia off the table for many.
Shares of Cameco stock have risen 35% in the last year alone, so similarly to the price of uranium. As that price increases then, so too should Cameco stock. That makes it an excellent buy if you’re looking to power your portfolio for a nuclear future.
