How to Profit From Uranium’s Coming Bull Market
Nuclear energy gets a bad rep. But is it justified?
When you ask most folks their opinion on nuclear, they’ll mention Three Mile Island, Chernobyl or Fukushima Daiichi.
The memories of these disasters – and the negative press that followed – have pushed many to think nuclear power is lousy.
That it’s unsafe.
But let’s step back and take a look at the facts. It will let us see the opportunity ahead.
First off… nuclear disasters are rare. The worst on record was Chernobyl in 1986. The World Health Organization released a 600-page report on the disaster. Based on the work of hundreds of scientists, economists and health experts, it showed the total number of radiation-related deaths is likely to be around 4,000.
That’s a sobering statistic to be sure. But let’s compare it to deaths from our main energy source today – fossil fuels.
According to the WHO, millions of people die from the air pollution caused by fossil fuels each year. The long-term effects on our environment could be even worse.
We don’t say this because we are pro-nuclear or anti-coal. We mention these stats only because it’s clear nuclear energy is both cleaner and safer than many people believe.
Another common misconception? That nuclear is just a small piece of our energy mix. Yet in our chart above, you can see there are currently 100 operating reactors in the United States. In 2015, nuclear made up 20% of U.S. electricity. Fossil fuels generated 67% of our power.
Now here’s the part that’s key to investors…
A Powerful Resource on the Verge of a Comeback
Interest in nuclear energy is building again. In 2012, the U.S. Nuclear Regulatory Commission approved the construction of four new reactors. It’s the first time this has happened since the 1970s.
Governments across the globe are realizing nuclear is a cheaper, better option. And this should push the price of uranium higher.
Our Chief Investment Strategist, Alexander Green, recently summed up the profit potential here perfectly:
When a nuclear accident occurs, the price of uranium plummets. And the tsunami triggered by the Tohoku earthquake on March 11, 2011, was a bolt out of the blue.
The price of uranium has plunged from more than $70 a pound to less than $30 today.
Yes, the prices of competing energy sources oil and gas are exceptionally low right now. But human beings continue to pump more than 40 billion tons of CO2 into the atmosphere each year. As the world population grows – and the demand for reduced carbon emissions increases as well – nuclear power should make a comeback.
Alex goes on to suggest two uranium resurgence plays. Cameco Corporation (NYSE: CCJ) is arguably the safest bet.
Profit From Uranium
Valued at $4.5 billion, Cameco is the world’s top uranium business. It produces and sells uranium worldwide.
Over the past decade, its share price has dropped along with the price of uranium. But it’s worth noting that most commodities have tanked during this period. And like any market, commodities move in cycles. (For proof, see Sean Brodrick’s recent write-ups on gold and silver.)
That said… even with the huge drop in uranium prices, Cameco is still profitable. In 2015, it brought in $1.9 billion in sales and $45 million in net income.
The company is also very shareholder-friendly. Cameco has paid a dividend every year since 1996.
Uranium should start to swing back any day now. Lower prices in the interim mean now is a perfect time to get in. Don’t let overreaction to rare events scare you away from the next uranium bull market.