How to Invest in Uranium

How to invest in uranium stocks?

One way to invest in uranium is to purchase stocks. While the spot price of uranium is currently trading in the US$83 per pound range, its still well below its all-time high was US$136.22 per pound in 2007. In addition, many uranium stocks remain undervalued, meaning that it’s possible to get good deals while companies are “on sale.”

When looking at how to buy uranium stocks, beginners may want to start with the world’s largest uranium-mining companies. Big miners often provide stability, and examples include uranium heavyweights such as Cameco (TSX:CCO,NYSE:CCJ), BHP (NYSE:BHP,ASX:BHP,LSE:BHP) and NexGen Energy (NYSE:NXE,TSX:NXE,ASX:NXG). There's also Kazakhstan's Kazatomprom (LSE:KAP) — formerly a state-owned entity, 15 percent of its shares are now publicly listed.

Of course, these large mining companies are not the last word in the market. In fact, there are quite a few mid-tier and junior uranium exploration companies that investors may want to take a closer look at. As a starting point, check out our list of the top-performing TSXV- and TSX-listed stocks and our list of the biggest ASX-listed uranium stocks.

Additionally, understanding where these companies’ uranium mines and production facilities are located can help investors make informed decisions. Those interested in uranium stocks may want to look at the countries that produce the most of the metal. The three top uranium-producing countries are Kazakhstan, Canada and Namibia.

How to invest in uranium ETFs?

For investors who want exposure to the uranium market, but crave the diversity of a basket of equities instead of single stocks, exchange-traded funds (ETFs) are generally the way to go. The selection of uranium-focused ETFs isn’t very wide, but luckily for investors the options are growing.

For starters, investors can look at the Global X Uranium ETF (ARCA:URA), which tracks a basket of mining firms. The fund is made up of both American and international uranium miners and producers.

An alternative to that ETF is the VanEck Uranium and Nuclear Energy ETF (ARCA:NLR), which tracks a market-cap-weighted index of companies in the uranium industry. Another option is the Global X Uranium Index ETF (TSX:HURA), which features Canadian uranium stocks and is designed to give investors exposure to the rebounding uranium industry.

The latest uranium ETF is the Sprott Uranium Miners ETF (ARCA:URNM). It’s an international uranium fund comprised of companies in Kazakhstan, Canada and the US. Using the North Shore Global Uranium Mining Index, the ETF tracks producers and explorers, as well as holders of physical uranium.

One of its holdings is the Sprott Physical Uranium Trust, a fund that invests solely in physical uranium. As mentioned, it's been credited with helping to boost prices and has become a popular investment vehicle.

How to invest in uranium futures?

As a third option, investors can look to the futures market while awaiting a further rise in the uranium price. Futures are financial contracts that obligate the buyer to purchase (or the seller to sell) an asset like a physical commodity or financial instrument at a predetermined future date and price.

In terms of uranium futures, investors once again have few options. CME Group (NASDAQ:CME) offers UxC uranium U3O8 futures. These contracts track U3O8, and each one represents 250 pounds of the nuclear fuel. The NYMEX also provides investors with a U3O8 futures trading option.

Futures are an important part of the market as there is currently no exchange-listed, transparent price instrument that consumers and suppliers can use to manage prices and risks. Furthermore, uranium futures provide investors with a marketplace for direct exposure to the price of uranium.

Is uranium a good investment?

Uranium excitement is high, with many experts saying the market is experiencing a renaissance.

Believers include John Ciampaglia, CEO of Sprott Asset Management, who sees many extremely bullish factors shaping today's uranium market.

"I do feel as though we're in year three of this cycle," said John Ciampaglia, CEO of Sprott Asset Management. "It's impossible to know how long it will last, but we still think it has quite a bit of room to grow," Ciampaglia, CEO of Sprott Asset Management, told the Investing News Network (INN) in November, after the uranium spot price breached US$80 per pound for the first time since 2008. However, he noted that prices will have to rise further before uranium companies will be incentivized to bring more supply online.

In a May 2024 interview with INN, Ben Finegold shared his thoughts on uranium's market dynamics, which he remains very bullish on. and gave advice to investors.

"One thing's for sure, that we've found the floor at about US$85 a pound. ... I think the price environment is incredibly supportive for investors at these levels," Finegold said. "I think that we're going to go higher than the US$106 this year for sure."

He also shared advice for investors looking to get into the market, which you can listen to here.

Looking at the numbers, nuclear energy currently provides 10 percent of the world’s electricity. In December, the United States and more than 20 other countries committed to tripling nuclear power capacity by 2050 to achieve net-zero carbon emissions in an effort to combat climate change.

As the need for clean energy grows and uranium oversupply diminishes, demand for the energy fuel is likely to grow. Investing while uranium stock prices have room improvement could offer an opportunity.