I’ve been bullish on uranium for a while, and it’s paid off well for my premium service subscribers. Now, I have a new video of an exclusive interview with an executive of two red-hot uranium companies that are on the launch pad.
Scott Melbye is the CEO of Uranium Royalty (Nasdaq: UROY) and the executive vice president of Uranium Energy (NYSE: UEC).
Before we get to the video, let me give you a little background on both companies … and why uranium demand is rising.
Uranium Royalty
Uranium Royaltyhas a market cap of $432 million. It owns royalty streams on a bunch of uranium projects around the world, including massive mines like McArthur River, Cigar Lake and Langer Heinrich.
For now, production at those mines has idled, but …
• It will come back online as the price of uranium rises.
Let’s look at the company’s six-month chart:
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UROY also owns a million pounds of physical uranium trioxide (UO3) at an average cost of $37.64 per pound.
At the time of writing, shares are trading at $5.07 and using the 50-day moving average as support. The stock has been trading sideways since October, but with uranium demand surging, it could break out soon.
Uranium Energy
Uranium Energy is a miner with a market cap of $1.2 billion. It also spun off UROY.
UEC has a past-producing project in Texas that shut down when uranium prices dropped too low to support production. It’s used its “idle” time to build out satellite projects and buy other projects in Wyoming, New Mexico, Nevada and Colorado.
Here’s the six-month chart:
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Just like UROY, UEC’s stock was using its 50-day moving average as support. It recently moved up to a six-month high before having a healthy retracement. At the time of writing, shares are trading at $4.90.
Why Uranium?
Well, I’ve made the bullish case for it here and here.
And just this month, Bloomberg reported that China is planning to build as many as 150 new nuclear reactors over the next 15 years. This is part of China’s plan to become carbon-neutral by 2060.
And funds are lining up to buy uranium.
The latest entrant is Canadian investment fund Sprott Asset Management LP. In July, it launched Sprott Physical Uranium Trust (OTC Pink: SRUUF) after acquiring an existing physical uranium fund, Uranium Participation.
• Since then, Sprott has gone on a uranium buying spree. SRUFF currently holds about 33 million pounds of uranium, and it just issued 129,300 more shares to buy MORE uranium.
Meanwhile, Kazakhstan, the biggest producer of uranium in the world, announced it’s going to launch its own physical fund.
And Yellow Cake PLC (OTC Pink: YLLXF), an existing fund, keeps gobbling up uranium like a fat kid in a candy store. In October, it announced plans to buy 3 million more pounds.
• This is putting extra demand on a global market already feeling the squeeze from years of underinvestment and mine closures.
So yeah, I think uranium prices are poised to blast off, and select stocks are well positioned to ride that move.
Straight From the Miner’s Mouth
I had a chance to talk to Scott about UEC and UROY while at the New Orleans Investment Conference in October. In the following video, Scott and I discuss both companies, the uranium market and the big picture for this energy metal.
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As you can see, Scott credits the entry of Sprott into the physical market as the latest catalyst for uranium, but he also says there’s a big bull market already in place.
As always, do your own research before you buy anything … but don’t miss this move in uranium.
Best wishes,
Sean
