These ASX uranium stocks are booming this year. here’s why
Specialty ASX uranium stocks are off to an exceptional start through 2021. For example, Paladin Energy Ltd (ASX: PDN), Boss Energy Ltd (ASX: BOE), and Limited deep yellow (ASX: DYL) are currently trading around 93%, 79% and 57% higher, respectively, since the first trading day of the year.
The only exception is Energy Resources of Australia Ltd (ASX: ERA), listed company ASX 68% owned by Rio Tinto Limited (ASX: RIO). This company closed its only uranium operation, the Ranger uranium mine, in January of this year. Subsequently, its share price fell by around 35% in 2021.
So why do shareholders of operating ASX uranium miners see an incredible return on investment (ROI) in 2021? We will take a look.
Uranium and green energy
Nuclear power is a zero emission generator. According to the Trading Economics website, it is increasingly being considered by governments such as the United States and China for the transition to clean energy.
Other elements are also experiencing increasing demand due to the Green Revolution, including the group elements lithium, copper and platinum. Uranium, however, is a much more controversial option in green energy production than others.
Uranium is currently traded in the commodities market at a price of US $ 30.90 per pound. Although it is only 0.65% higher this year, experts predict a drop in supply and growing demand will see its price rise further.
The radioactive element entered a rut in the market after the Fukushima nuclear disaster. Its price has still not returned to the levels observed before the accident.
Arguably, the optimism surrounding the growing acceptance of nuclear power is one of the reasons ASX’s uranium stocks are doing so well this year.
Uranium production in Australia
Demand is only one side of the uranium equation. The other, of course, is the offer. There are currently only two operating uranium mines in the country, the BHP Group Ltd (ASX: BHP) owned the Olympic Dam mine and General Atomic’s Beverley and Four Mile mine. Both mines are in South Australia.
Yesterday, Boss Energy announced that it has all the necessary permits to resume operations at its Honeymoon uranium mine. The news blew up ASX’s uranium stocks. Boss Energy was up 29%, Paladin was up 19%, and Deep Yellow was 7.2% higher.
Even Energy Resources, which has no current activity, rose 2.4% yesterday. The glow of the honeymoon news shone on other nuclear actions. Investors seem optimistic that Australia could increase its uranium production in the future and that the government is more ready to approve such projects.
Recent history of ASX Uranium shares
As of this writing, ASX uranium stocks are having a bad day. Paladin share price is 0.53% higher, Energy Resources shares are stable, Boss Energy is down 13.5%, and Deep Yellow share price is also stable.
But one could argue that the rise in the value of these stocks during 2021 is not a simple failure. Each is significantly higher than 12 months ago. Paladin is up about 359%, Boss Energy is 172% higher, and Deep Yellow is about 183% higher. Even energy resources have increased by 19% compared to this period last year.
The market caps of Paladin, Boss Energy and Deep Yellow are approximately $ 1.25 billion, $ 456 million and $ 241 million, respectively.
Where to invest $ 1000 now
When investment expert Scott Phillips has stock advice, he can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter that he’s been running for over eight years has offered thousands of paying members stock picks that have doubled, tripled, or even more. *
Scott has just revealed what he believes to be the five best ASX stocks for investors to buy now. These stocks are trading at very low prices and Scott thinks they are a great buy right now.
* Returns from February 15, 2021
Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article only contains general investment advice (under AFSL 400691). Authorized by Bruce Jackson.