Are these the best uranium stocks to watch in 2024?

Uranium has historically been an unpopular commodity amongst investors compared to alternatives such as gold, platinum or silver. And it’s not hard to see why. Due to its radioactive nature, buying the material directly and taking physical possession is impossible. And many appreciate the safety of physically owning their commodities.

But the true source of its unpopularity is its close association with nuclear energy, and the destruction wrought since the closing days of the Second World War. In Japan, Hiroshima, Nagasaki, and Fukushima continue to breed distrust of the energy source. Japan’s nuclear power usage has fallen from 30% prior to the meltdown to around 7.5% today. But it’s still planning to increase it to 20% by 2030. And this speaks volumes about the future of nuclear energy.

And North of Kyiv's Ukrainian capital lies the 1,000 square mile Chornobyl nuclear exclusion zone. Like Fukushima, its atomic reactor meltdown saw a terrible loss of human life. It also cost an estimated $68 billion to contain.

Together, these disasters changed how the world viewed nuclear power's safety. Germany plans to shut down all nuclear reactors by the end of this year. Meanwhile, Australia, which has the largest uranium reserves in the world, has completely banned atomic power stations.

Uranium stocks: a changing world

But fossil fuels will run out by 2060. Difficult decisions around the future of energy will need to be made soon. According to the US International Energy Agency, global energy demand has trebled between 1980 and 2018, and electricity demand is rising faster than renewables can keep up.

Moreover, in the wake of the COP 26 climate change summit, governments and corporations are pursuing net-zero targets within the next few decades. In August, the Intergovernmental Panel on Climate Change published a report which concluded that it had ‘high confidence’ that human activity is partially responsible for recent environmental disasters, including the European flooding in July last year and the US’s Hurricane Ida.

One way or another, the world will move on from fossil fuels. And nuclear energy will form part of the answer. Unlike solar or wind, it provides a consistent stream of energy, already meeting 10% of global electricity needs. 70.6% of France’s energy is nuclear-powered. In the UK, it’s 20%. And engineering jewel Rolls-Royce is developing Small Modular Reactors that are significantly cheaper than the ones due to retire in 2026.

Even China, which accounts for 36% of global greenhouse emissions, has put aside $440 billion to transition to clean energy by 2060. It’s planning to build 150 new nuclear reactors over the next 15 years, with only 440 currently in use worldwide.

Political unrest in Kazakhstan

After Fukushima, distrust of nuclear power saw global demand for uranium slump. At the same time, the former Soviet satellite Kazakhstan significantly increased production, making it impossible for other suppliers to cut supply to support prices. The country’s state-owned Kazatomprom produced 10% of the world’s uranium at its price peak in 2007, which has since increased to 43% as of 2019. The depressed spot price saw hundreds of its global competitors become unprofitable. And nowadays, 85% of all uranium is mined by just ten companies.

But supply and demand can change with the wind. Brent Crude hit a record low in 2020, as lockdowns saw global demand for oil collapse. But the inevitable eventually happened. When the world’s economies reopened, oil demand soared while supply from production remained muted. And Brent Crude soared to record highs.

The same may now be happening for uranium after days of political unrest shocked the central Asian country. While it produces 1.6 million barrels of oil every day, the average annual income sits at about £2,500 a year. And the Western Europe-sized nation has a population of just 18 million people, the same as London and the South East.

Public protects are illegal without a government permit and previous strikes have been dealt with extremely harshly. But on 2 January, demonstrations began in oil hub Zhanaozen, site of deadly police clashes a decade ago. Protests have now spread across the country, as the government price cap on liquefied petroleum gas was lifted, doubling the price overnight. Many Kazakhs use the gas in place of conventional car fuel for its cheaper price. While the cap has now been reimposed, some of the anger was also directed at former long-time President Nursultan Nazarbayev, who has now been removed from his position as head of the country’s Security Council.

In 2022, current President Kassym-Jomart Tokayev reported ‘20,000 bandits’ attacked the cultural hub Almaty. In response, he instructed security forces to ‘fire without warning’, banned mass gatherings and set curfews in place. Three thousand rioters were arrested, some were killed, and more than 400 people ended up in hospital.

Echoing the 2014 Crimean crisis, under the Collective Security Treaty Organization (CSTO), Russian troops were invited into Kazakhstan at the request of Tokayev to help ‘stabilise’ the country. Meanwhile, the US stated it would monitor the situation to prevent ‘the seizure of Kazakh institutions.’ This political crisis could have seen the world’s largest uranium producer cease production overnight.

Best uranium stocks for 2024

While uranium isn’t traded on the open market, spot and long-term prices are published by independent market consultants UxC, LLC, and TradeTech. And both were trading for under $15 until 2003.

But the spot price has been volatile over the years, spiking to $136 in June 2007 and sinking to $18 by 2016. Between May and December last year, it rose 59% from $29 to $46 in just seven months. And the Bank of America expects it to shoot up even further to $60 during the first quarter of this year.

For those who want to take advantage of this volatility, there are multiple ways to invest in the best uranium stocks.

The first is to buy stocks in mining companies that focus exclusively on the commodity. Canadian Cameco is the largest by market value but made a net loss of $72 million in recent Q3 results.

Australian choices include Paladin, which is up 205% over the past year, and Energy Resources of Australia, up 30%. However, while Canada and Australia are reserve leaders behind Kazakhstan, investing in individual stocks focussed on one mineral comes with some risk. Of course, this strategy also offers higher reward.

A safer choice is to invest FTSE 100 miners Rio Tinto and BHP Group. Both are top 10 global uranium producers but also mine multiple other commodities, leaving investors less exposed to uranium price volatility. However, because they don’t focus on uranium exclusively, their share prices can be affected by other factors. Both experienced significant volatility in 2021 as Chinese demand for iron ore prices fell in line with the country’s slumping housing market.

Finally, some companies invest in uranium companies as well as Uranium-focussed Exchange Traded Funds (ETFs). For example, Yellowcake offers ‘direct exposure to the spot uranium price without exploration, development, mining or processing risk.’ And it’s up 45% over the past year. Similarly, Geiger Counter, which invests heavily in uranium explorers, is up 96%.

One popular ETF is Global X Uranium, up 50% over the year, which tracks both miners as well as nuclear production companies, giving investors wider exposure to the entire supply chain. ETFs are often seen as a middle-risk option, as they offer exposure to one mineral across multiple companies. However, initial investors in the ETF in January 2018 made zero returns until the beginning of last year.

There are advantages and setbacks to every option. However, what’s clear is the best uranium stocks will remain volatile for some time to come.

Remember, past performance is not indicative of future returns.

1. NAK Kazatomprom
2. Yellowcake
3. Ferro-Alloy
4. Neo Energy Metals
5. Bushveld Minerals[OY1]

NAK Kazatomprom

NAK Kazatomprom, the world’s largest uranium producer, is a key player in the global nuclear energy market. Based in Kazakhstan, the company leverages the country’s rich uranium reserves and employs cost-effective in-situ recovery (ISR) technology, enabling it to produce uranium more efficiently than many competitors. Kazatomprom’s dominant market position allows it to influence global uranium prices, making it a significant force in the industry.

Backed by the Kazakh government, Kazatomprom benefits from strong support and resource access, adding stability to its operations. For investors, Kazatomprom offers exposure to the growing demand for nuclear energy, driven by the global shift towards clean energy solutions. Its low-cost production advantage and market leadership make it an attractive investment for those looking to capitalise on the long-term potential of uranium in the global energy mix.

Market Capitalisation: £7.62 billion

Yellowcake

Yellowcake is a unique uranium investment company that directly exposes investors to the uranium market. The company purchases and holds physical uranium (U3O8), offering a simple way for investors to gain exposure to the commodity without the complexities of mining stocks or ETFs. Yellow Cake’s strategy is to acquire and store uranium when prices are low, benefiting from potential price increases as global demand for nuclear energy grows.

Yellow Cake’s business model is straightforward and capitalises on the growing recognition of uranium as a critical component in the transition to low-carbon energy. With no operational mining risks and a clear focus on uranium price appreciation, the company is an attractive option for investors seeking pure exposure to the uranium market. Yellow Cake’s ability to acquire uranium at competitive prices, combined with the potential for substantial price gains in the future, makes it a compelling choice for those interested in the long-term growth prospects of the nuclear energy sector.

Market Capitalisation: £1.15 billion

Ferro-Alloy Resources

Ferro-Alloy Resources is a company focused on producing and developing vanadium and other metals essential for modern industry. The company’s primary asset is the Balasausqandiq vanadium project in Kazakhstan, which is considered one of the world’s largest and highest-grade vanadium deposits. Vanadium is a critical metal used in strengthening steel alloys and in emerging technologies like vanadium redox flow batteries, which are gaining attention for large-scale energy storage solutions.

Ferro-Alloy Resources stands out due to its potential for low-cost production, leveraging both its high-grade resources and advanced processing technologies. The company aims to become a significant player in the vanadium market by capitalising on the growing demand for vanadium in both traditional steel production and the renewable energy sector.

For investors, Ferro-Alloy Resources presents an opportunity to invest in a company with significant growth potential, driven by the rising need for vanadium in both the steel industry and the clean energy transition. Its strategic positioning in Kazakhstan and its focus on cost-effective production methods make it an appealing option for those interested in the future of critical metals.

Market Capitalisation: £28.39 million

Neo Energy Metals

Neo Energy Metals is a company focused on exploring and developing critical and strategic minerals, particularly those essential for the energy transition and advanced technologies. The company’s primary interests lie in the exploration of lithium, rare earth elements, and other strategic minerals vital for producing batteries, electric vehicles, and renewable energy systems.

Neo Energy Metals aims to capitalise on the increasing global demand for these minerals, driven by the rapid adoption of clean energy technologies and the shift towards a more sustainable energy infrastructure. The company’s exploration activities aim to identify and develop high-potential mineral deposits that can supply these critical materials to the growing markets.

For investors, Neo Energy Metals represents an opportunity to gain exposure to the booming market for strategic minerals. As the demand for lithium, rare earth elements, and other energy-critical minerals continues to grow, the company’s focus on these key resources positions it as a potentially significant player in the supply chain for clean energy and advanced technologies. This makes Neo Energy Metals an attractive option for those looking to invest in the future of energy and technology.

Market Capitalisation: £20.54 million

Bushveld Minerals

Bushveld Minerals is a company focused on producing and developing vanadium, a critical metal primarily used to strengthen steel alloys and increasingly important in the energy storage sector. The company operates in South Africa, where it controls some of the world’s largest and highest-grade vanadium resources.

Bushveld Minerals stands out due to its strategic focus on the growing market for vanadium, particularly in the context of renewable energy. Vanadium redox flow batteries (VRFBs) are emerging as a leading technology for large-scale energy storage, essential for stabilising power grids and supporting the integration of renewable energy sources like wind and solar. Bushveld is well-positioned to benefit from this trend, with its vertically integrated operations allowing it to capture value across the entire supply chain.

For investors, Bushveld Minerals offers exposure to both the traditional steel market and the rapidly growing energy storage sector. Its significant resource base, combined with its focus on innovation and expansion in the vanadium industry, makes it an attractive option for those looking to invest in the future of clean energy and advanced materials.

Market Capitalisation: £14.32 million

Top uranium stocks to watch summed up

The above companies are just a small selection of top stocks to watch. Remember that any company can also fail, so always do your own research.

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