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The Uranium Resurgence: Is Now the Time for Nuclear Energy Growth?
We’re shining a spotlight on the uranium opportunity, which is being spurred over the long-term by nuclear energy entering into the ‘green transition’ conversation.
MCF Energy (TSXV: MCF) (OTCQX: MCFNF) (FRA: DC6) was established by a group of legendary energy entrepreneurs and explorers bringing capital and commitment to strengthening Europe’s energy security through domestic natural gas development. Key stakeholders of the company have previously created or led several billion-dollar energy ventures including in Europe. They are the leading technical, financial and operational minds to leverage this opportunity.
The company aims to offer energy security, but why is this such a key issue for Europe right now?
Click Here to find out.
Happy Monday, and welcome to another edition of Investing Intel from the team at ValueTheMarkets! As always, the newsletter is packed with stock picks and investing insights we think you’ll enjoy, including:
👉 Three stock tips
👉 Investing signals
👉 Fear & Greed analysis
👉 Key dates for your diary
👉 Investment strategy insights
Things have gone a bit nuclear this week. We’re looking into uranium and why the glowing rocks might be making something of a comeback. Along with nuclear energy, uranium has suffered from something of a reputation problem, but we think the commodity looks like it could be essential to the future of power generation.
That could make now the perfect time to back the commodity!
As such, we’ve picked out three uranium stocks which are definitely worth a long hard look…
Cameco Corporation (NYSE: CCJ)
As nations around the world focus on reducing carbon emissions, nuclear energy may increasingly be viewed as part of the clean energy solution. As demand for nuclear energy increases, so does the demand for uranium.
With many mines around the world shutting down or reducing production over recent years, the uranium market has faced significant supply challenges. As one of the largest uranium producers, Cameco could benefit from any rise in prices resulting from these supply constraints.
Cameco's McArthur River mine, one of the largest high-grade uranium mines in the world, has been on care and maintenance since 2018. If market conditions improve, restarting production at McArthur could provide a significant boost to Cameco's output and revenues.
The business is a market leader in uranium production. This, along with its long-standing relationships with utilities worldwide, readies it to exploit market growth.
Cameco has maintained a solid financial position despite challenging market conditions. This provides the company with stability and the ability to weather potential future market downturns.
Yellow Cake PLC (OTC: YLLXF)
Yellow Cake has a strategic purchase agreement with Kazatomprom, the world's largest uranium producer, providing it with reliable access to uranium at predetermined prices.
The company’s business model is straightforward and easy to understand. The company buys and stores uranium, with the intent to sell at higher prices in the future. This simplicity can be attractive to investors.
For investors concerned about rising energy prices or looking for exposure to the energy sector, Yellow Cake can serve as an alternative or complement to investments in oil, gas, or renewable energy.
Centrus Energy Corp (NYSEAMERICAN: LEU)
This is a business which sits at the forefront of advanced uranium enrichment technology. The company's American Centrifuge technology has potential applications in commercial and government sectors.
Handily, Centrus Energy has long-standing relationships with various government entities. In the US, the company has contracts with the Department of Energy for the development of advanced nuclear technologies. These contracts provide a stable source of revenue and underline the strategic importance of the company.
After years of depressed prices, the uranium market is showing signs of recovery. As a leading supplier of nuclear fuel, Centrus Energy is well-placed to benefit.
Centrus Energy is fortunate to possess a diversified supply chain with access to uranium supplies from locations across the globe. This helps mitigate the risk of supply disruptions.
According to the World Nuclear Organisation, roughly 10% of planet Earth’s energy is generated by the 440 active nuclear reactors across the globe. Nuclear also accounts for 26% of all low-carbon power and is the second most significant source.
However, The International Energy Agency (IEA) says that 2021 saw global nuclear power capacity decline by almost 3 GW as newly completed reactors were not able to compensate for over 8 GW of retirements. In fact, as you can see from the below graph, nuclear energy generation has only recently recovered from the hit it took due to the Fukushima disaster in 2011.
Of course, Fukushima is far from the only nuclear disaster to seriously damage the reputation of nuclear energy (I’m looking at you, Chernobyl).
But this negative PR belies the fact that data indicates nuclear is one of the safest energy sources out there. As the graph below shows, nuclear is far less deadly than heavily polluting alternatives like coal and oil.
But does this mean that nuclear energy is on the comeback trail? Well, as we’ve already shown, global nuclear energy generation has increased back to pre-Fukushima levels despite some major reactor closures.
The World Nuclear Association says around 60 reactors are currently under construction around the world, including in China, India and Russia. The IEA's 'Stated Policies Scenario’, which is based on a review of policy announcements, plans and the evolution of different countries’ energy sectors, sees installed nuclear capacity growth of over 43% from 2020 to 2050. This growth is largely seen as being driven by the Asian market.
This could be an underestimate, however, as appetites for nuclear energy appear to be improving in the West. Indeed, the US, Japan and the UK are among the developed nations to have reaffirmed their commitments to nuclear energy over the past year, with analysts predicting that the increasing availability of Small Modular Reactors could catalyse a major return to popularity for nuclear energy.
Of course, with nuclear energy generation standing out as the greatest driver behind uranium demand, this potential could make the commodity a smart long-term investment.
Here are the top trending stocks from the last seven days according to Google:
Logitech International (NASDAQ: LOGI)
Marathon Digital Holdings (NASDAQ: MARA)
Virgin Galactic Holdings (NYSE: SPCE)
Riot Platforms Inc (NASDAQ: RIOT)
3M Co (NYSE: MMM)
Logitech appears at the top of the trending list due to the company’s bizarre links to the doomed submersible story which has bewitched people across the globe this week. When the story broke, it’s fair to say people were surprised to find that the vessel was controlled by a cheap Logitech gamepad controller.
Association with the tragedy has not exactly worked in the company’s favour, with its share price having dipped by over 3% last week.
Next on the list is Marathon Digital Holdings, which has soared in price by more than a third since last Monday. Along with fellow digital assets specialists Riot Platforms, Marathon has benefited from Bitcoin prices hitting a one-year high.
Space farers Virgin Galactic enjoyed a positive week as well, with the company having successfully raised $300m through an at-the-market offering of common stock. With the business targeting its first commercial space flight launch before the end of June, investors have been finding a lot to get excited about.
Rounding out the list is 3M Co, which has reached a settlement of over $10bn with a variety of US-based public water bodies due to pollution. The chemicals giant had allegedly manufactured firefighting materials that contaminated soils and water sources, leading to spiralling legal action.
Fear & Greed
The Fear and Greed Index is a measure of stock market sentiment calculated by CNN Business using seven measures, including market momentum, market volatility, and safe haven demand. It’s meant to shed light on the emotions currently driving the market, giving you insight into how traders are making decisions. Remember, traders are humans, not robots.
Investor sentiment is broadly unchanged over the last week, with just a slight reduction in the level of greed powering investment decision-making. Small declines in market momentum and stock price breadth appear to have driven sentiment this tiny portion lower over the five-day period.
Dates in the Diary
Monday 26th – Dallas Fed Manufacturing Index Data (Jun) / German Ifo Business Climate (Jun)
Tuesday 27th – US Durable Goods Orders (May) / US House Price Data (Apr) / Canadian Inflation Data (May) / ECB President Speech
Wednesday 28th – US Fed Chair Powell Speech / German Consumer Confidence (Jul)
Thursday 29th – US Fed Chair Powell Speech / US GDP Data (Q1) / Eurozone Sentiment Data (Jun) / German Preliminary Inflation Data (Jun)
Friday 30th – US Personal Income and Spending Data (May) / Eurozone Employment Data (May) / Eurozone Inflation Data (Jun) / French Preliminary Inflation Data (Jun)
More Hot Content from ValueTheMarkets
Unleashing Technology's Potential: Navigating the Global Mining Market. Explore trends, opportunities, and challenges for informed decision-making.
Copper, integral to sustainability efforts, fuels modern industrial sectors with companies like SCCO, CSCCF, and KVGOF championing the mineral revolution.
Atmos Energy (ATO), a large natural gas company in the US, offers reliable services, sustainability initiatives, and strong financial performance.
Explore how hydrocarbon companies like MCF Energy (MCF), Occidental Petroleum (OXY), Hess Corp (HES), and Imperial Oil (IMO) are navigating market volatility.
ARC Resources (ARX), a major player in Canada's gas production, hopes to transform the energy sector with its Attachie project and open growth opportunities.
Permian Resources Corp (PR) delivered a strong Q1 performance. Its strategic initiatives and focus on operational efficiency position it as a compelling investment prospect.
Investing Strategy Ideas: Sector Rotation
Sector rotation is a lot what it sounds like.
If you were using the approach, you would chop and change the sectors you chose to back based on their anticipated performance, thus theoretically allowing an investor to take advantage of the cyclical nature of the economy.
The business cycle of the economy is typically separated into four stages: Expansion, Peak, Contraction and Recovery. The basics of sector rotation means identifying which sectors typically perform well in each stage and identifying when stages begin and end.
This means investors hoping to use a sector rotation strategy will need to actively manage their portfolio, adjusting their holdings of assets among different sectors depending on economic conditions.
For example, Information Technology stocks might be great to invest in during Expansion, but when you have identified that the business cycle is reaching its Peak it might be time to sell up and invest in Financial Services stocks.
Ultimately, the goal here is the outperform the market by chopping and changing investments based on the prevailing economic environment. As always, remember that there are risks involved in every investment approach!
Until Next Time!
Many thanks for taking the time to read Investing Intel today. We hope you’ve enjoyed our insights and are looking forward to more in the week ahead.
Have a good week!
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