We recently compiled a list of the 10 Best Uranium Stocks to Invest in Now. In this article, we are going to take a look at where NexGen Energy Ltd. (NYSE:NXE) stands against the other uranium stocks.
The global demand for uranium is accelerating, driven by advancements in artificial intelligence (AI) and the electrification of industries. According to research from Goldman Sachs, data center energy consumption is expected to surge by 160% by 2030. Nuclear power, with its ability to deliver consistent and low-carbon electricity, is emerging as the preferred solution to meet these energy demands. Tech giants have publicly recognized the role of nuclear energy in supporting their operational energy needs.
In November 2024, the Biden administration unveiled a plan to triple U.S. nuclear energy capacity by 2050. This plan includes the deployment of 200 GW of new nuclear capacity through new reactor construction, plant restarts, and facility upgrades. In the short term, the administration aims to bring 35 GW of new capacity online by 2035.
Following the domestic nuclear energy deployment targets by the Biden administration, Russia announced restrictions on the export of enriched uranium to the United States. According to the Russian Government, these temporary restrictions are a response to the U.S. ban on Russian uranium imports, which was signed into law earlier in 2024. However, the U.S. ban includes waivers that allow shipments to continue until 2027 to address supply concerns. According to Reuters, Russia is a major player in the global uranium market and produces about 44% of the world’s uranium enrichment capacity. In 2023, 27% of the enriched uranium used by U.S. commercial nuclear reactors was imported from Russia.
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In an interview with CNBC on December 12, 2024, John Ciampaglia, CEO at Sprott Asset Management, discussed the current state and future prospects of the uranium market. Ciampaglia acknowledged that despite high demand, there has been no major increase in the production of uranium. He explained that this is a strategic decision rooted in supply discipline, a lesson learned when the industry was struggling to survive for nearly 10 years after the accident in 2011 at the Fukushima Daiichi Nuclear Power Plant in Japan. Ciampaglia noted that producers are now cautious about balancing future production with future demand, ensuring that they have built their contract books with utilities before ramping up production. This approach is aimed at maximizing value and revenue in the current market cycle.
Ciampaglia identified three major drivers: growing electricity consumption in emerging markets such as China and India, the pivot of Western countries toward energy security and decarbonization, and the development of small modular reactors (SMRs). He noted that big tech companies are investing in SMR technology, which is crucial for validating and advancing this technology. This investment is expected to boost the demand for uranium.
Ciampaglia also mentioned the gradual recovery of uranium prices, which had been stagnant in 2019 and 2020. The price is now slowly moving up, both in the spot market and the term market, reflecting the building demand. Higher prices are necessary to incentivize miners to expand production and develop new mines, which is essential for meeting the growing demand for uranium in the coming years.
As the world leans heavily on nuclear energy to power the next phase of technological and industrial advancements, uranium will remain a critical resource.
Our Methodology
For this article, we used Finviz and Yahoo stock screeners to find companies that are involved in the mining, trading, or processing of uranium. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks with the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A miner in a hard hat and apron holding a piece of uranium ore in the Athabasca Basin, Saskatchewan.
Number of Hedge Fund Holders: 32
NexGen Energy Ltd. (NYSE:NXE) is a Canadian uranium exploration and development company known for its Rook I project in Saskatchewan’s Athabasca Basin. The project hosts the world-class Arrow deposit, which is one of the largest high-grade uranium deposits globally.
NexGen Energy Ltd. (NYSE:NXE) is making significant strides in exploration, with the recent discovery at Patterson Corridor East. The Patterson Corridor East drilling campaign has intersected multiple high-grade uranium zones which has the potential to significantly expand the company’s resource base. This discovery is located 3.5 kilometers from the Arrow deposit is entirely contained within the basement rock and exhibits greater off-scale mineralization than what was initially observed at Arrow. The company is batching and sending core samples to the lab for detailed analysis and results are expected in the coming months.
Furthermore, NexGen Energy Ltd. (NYSE:NXE) is nearing the final stages of the regulatory approval process for the Rook 1 Project, with the Canadian Nuclear Safety Commission (CNSC) finalizing the remaining aspects of the Environmental Impact Statement (EIS). The company has received 100% formalized support from local indigenous communities and leaders, which is crucial for the project’s success.
Overall NXE ranks 2nd on our list of the best uranium stocks to invest in. While we acknowledge the potential of NXE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NXE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
This article was originally published here.
