“As far as a safe bet, in my opinion it’s about as safe as it gets barring some unforeseen circumstance,” said Justin Huhn of Uranium Insider.
After years of low prices and depressed sentiment, uranium appears to be gearing up for a turnaround, and interest in the commodity is on the rise.
Speaking to the Investing News Network, Justin Huhn, founder and publisher of Uranium Insider, said although the market has experienced some false starts, a few elements are different this time.
Notably, the nuclear fuel market is tightening, including U3O8.
SWU, or separative work unit, which Huhn described as essentially the cost of enrichment, has increased steadily since bottoming in 2018, while the cost of conversion has hit an all-time high.
“All of the elements of the fuel cycle are now moving up sort of together,” he said. “Conversion and SWU have moved more consistently than U3O8, but we think that move is coming.”
Aside from that, Huhn said it’s important to note that institutions have been starting to take sizeable positions in the uranium market, primarily in mid- to large-cap stocks and exchange-traded funds.
Investors should be wary of volatility, but overall his optimism about uranium is high.
“As far as a safe bet, in my opinion it’s about as safe as it gets barring some unforeseen circumstance,” he explained. “The prices absolutely have to go up — there just isn’t enough supply out there to meet the demand, assuming that demand continues and the plans for that demand continue.”
In terms of what types of stocks he finds attractive, Huhn said he favors development-stage companies.
“We like developers that have a clear path towards, if not actual production, at least acquisition of assets in good jurisdictions and the forthright moving of those assets toward production during a bull market,” he said, emphasizing that management is another key consideration.
Watch the interview above for more from Huhn on uranium supply and demand fundamentals, and what could be next for the industry as 2021 continues.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.