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The world is slowly transitioning towards clean and green energy sources to reduce carbon emissions, which has given the prospects for nuclear energy stocks a huge boost. Let’s see what the buzz is all about!
More countries around the world are increasingly focusing on green energy and diversifying away from hydrocarbons to reduce their carbon footprint. As a result, nuclear power as a source of clean energy is gaining traction.
In 2020, the global nuclear-generating capacity was 393 GW (gigawatts), which is expected to double to 792 GW by 2050, according to the International Atomic Energy Agency.
This shift is already being reflected in the price of uranium stocks. But what does clean and green energy have to do with uranium? Well, most nuclear power plants use uranium atoms which split up during nuclear fission, releasing a large amount of energy. This energy is a carbon-free, efficient, reliable, and an abundant source of base-load electricity. It is also less expensive than fossil fuel energy.
So, what are some of the best uranium stocks in Canada that you can invest in? Let’s take a look!
One of the leading producers of uranium, this $11.30 billion market cap company based is Saskatoon makes for an attractive investment. Cameco has the licensed capacity to produce 53 million pounds of uranium concentrates every year. While the stock pays dividends, the yield on them is currently low. But the company is constantly growing and boasts $1.4 billion in cash and short-term investments.
This $1.32 billion market cap company enjoys strong financials with no debt and exposure to various uranium-rich regions. They are based in Northern Saskatchewan. While the company doesn’t pay dividends, the stock is poised for growth as the demand for uranium grows. The stock has grown about 600% since the market crash, but since its November 2021 high of $2.64, the stock has corrected to its current level of $1.62.
This Vancouver-based mineral exploration company has a market cap of $2.80 billion. Its shares are currently trading at $5.87, down from the $8.09 high in November. NexGen holds 199,576 hectares of uranium-rich land in Saskatchewan, while its discovery, Arrow, holds the largest development-stage deposits of heavy metal in the country.
This pure-play royalty stock has a market cap of $369.10 million. Uranium Royalty describes itself as the only uranium-focused royalty and streaming company. This stock gives you more flexibility than direct uranium miners and producers, as it provides you exposure to the uranium price through physical uranium and also its interests in royalties, streams, and companies.
The $649.24 million market cap Global Atomic operates two divisions: uranium (mainly in Niger-based Dasa) and zinc (in a Turkish plant). Its projected production capacity is 44 million pounds a year, and the company shares peaked at $4.84 in early November 2021.
Down more than 48% from its September high, this stock is trading at $0.33, putting its market cap at $174.32 million. The company has exposure to uranium as well as cobalt-nickel, which means you get access to yet another clean market segment: batteries for EV and renewables.
With its shares currently trading around $0.84, the company has a market cap of just $33.94 million. But it is only down 28% from its $1.11 high in Nov. 2021. Trench Metals has the right to acquire 100% stakes in two uranium projects, Higginson Lake and Gorilla Lake in Saskatchewan, which it views as “highly prospective.”
* All number values as of February 14, 2022. Subject to change.
If you want to buy nuclear energy stocks or uranium stocks in Canada, where do you start? The best and cheapest way is to buy from discount brokers. Wealthsimple Trade and Questrade are two good choices.
This online broker offers a robo-advisor service and unlimited $0 commission trades. Its user-friendly app and desktop platform ensures that anyone can invest in a professionally managed portfolio without needing a 6-figure investment— there is no minimum account balance requirement.
Being a member of Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF) means that user funds are protected up to $1 million against insolvency.
Its significantly lower management fees compared to traditional brokers, and its hassle-free investment offerings make Wealthsimple popular beginner investor. Not to mention, the company offers a $50 sign-up bonus to new eligible accounts.
While two-thirds of the world’s total electricity still comes from fossil fuels, uranium fuelled nuclear power plants are becoming a key part of the world’s energy mix, accounting for about 10% of the world’s electricity requirements.
As the world goes green, nuclear power or uranium-fuelled power is seeing increased usage. It implies steady growth in demand for uranium, which, in turn, is good for uranium stocks, which have already seen growth in the past year.
Uranium futures prices are up about 41% over the past year. And if you want exposure to potential price increases as well, investing in the companies involved in uranium mining is the way to go.
With low fees as its top-selling feature, Questrade is a favorite among more experienced investors. No matter if you have a registered or an unregistered account, you won’t be paying any annual fee. Its commission fees are also among the lowest in the industry. As of October 1, 2020, Questrade no longer charges an inactivity fee either.
Questrade offers robust active trading on both desktop and mobile, as well as solid research and monitoring tools for its customers to make smart decisions.
The minimum balance requirement on the platform is $1,000. New investors can get $50 worth of free trades when they sign up.
Investing in uranium is to bet on the growing shift to clean energy, which is happening at a fast pace. As such, you might want to consider investing in uranium for several reasons, including portfolio diversification and increased acceptance of uranium as a power source.
No doubt, there are risks associated with this move, such as lower prices of coal and natural gas that could slow down the adoption of nuclear energy. Some far-off instances to affect the prices negatively include economic or political turmoil weakening the demand for commodities, a global recession that could weaken power demand, and another nuclear reactor accident. Also, much like any other market, the uranium market is volatile too.
Uranium is the primary ingredient in the generation of nuclear power that has significant advantages over fossil fuels like coal, in terms of no production of carbon dioxide. As such, nuclear energy is the world’s second-largest source of low-carbon power after hydroelectric power.
As of Jan. 2022, about 440 nuclear power reactors are operating in 32 countries, with a combined capacity of about 390 GW, according to the World Nuclear Association.
Canada, the 39th most populated country in the world, produces about 2% of the world’s electricity. The country relies on hydropower for the majority of its power generation, accounting for 59.3% of the country’s electricity supply. This makes Canada the second-largest producer of hydroelectricity in the world.
When it comes to uranium, Canada is the world’s second-largest producer of the commodity, contributing 13% of global production in 2018. The country exports a whopping 85% of its uranium production, while the remainder is used to fuel reactors in Canada.
It has the world’s largest deposits of high-grade uranium, which according to the government, is 100 times greater than the world average, meaning Canada is well-positioned to maintain its importance in uranium production in the future as well.
While Canada doesn’t use a lot of uranium domestically, countries around the world are moving to clean nuclear power as the “transitional energy source”.
There is certainly a growing trend towards a clean renewable energy source around the world, which makes uranium stocks or nuclear energy stocks attractive. But this trend is not as fast-paced as the technology industry, which means betting on energy is a long-term play.
Still, the future of nuclear energy stocks looks bright. Supply and demand dynamics are favourable, and therefore, investing in the best nuclear energy stocks/ uranium stocks in Canada may be a good option for your portfolio.
Cameco Corporation is Canada’s leading uranium producer as well as the world’s largest publicly traded uranium company. This Saskatchewan based company operates uranium mines in North America and Kazakhstan. Besides exploring and mining, Cameco refines, converts, and fabricates uranium. The company sells its uranium to be used as fuel for generating electricity in nuclear power reactors.
Cameco has a market capitalization of over $11.30 billion, whose stocks hit an all-time high at $28.49 in early November 2021. The company reported revenue of $465 million in Q4 of 2021, and its management said they will continue to ramp production up to 15 million pounds per year by 2024, focusing on long-term supply contracts to raise profitability.
*As of February 14, 2022. Subject to change.
Uranium usage as an alternative to natural gas and oil has been rising as the world prioritizes clean energy sources. It has driven up the prices of uranium stocks.
While uranium stocks can be volatile, companies engaging with uranium have registered growth as investors bet that uranium will be used to decarbonize the world along with renewables in the coming years.
Having said that, it is always best to research the company and some key metrics like market cap, past performance and yield before making any investment decisions.
Nuclear energy is a sustainable source of energy that requires uranium. It is a very common metal found all over the world. The energy produced by nuclear energy is zero-emission, clean and renewable.
Nuclear energy is a source of carbon-free electricity, which is flexible and relatively low cost. However, it creates byproducts that are radioactive, though minimal. Thus, it requires extensive safety measures.
While nuclear energy stocks mainly involve uranium stocks, renewable energy stocks also cover companies that provide wind, solar, and hydroelectric energy solutions.
