UEC Stock Pops as Investors Brace for Uranium

Source: engel.ac / Shutterstock

Today’s price movements in the energy sector have been quite remarkable. News that the Russian energy giant Gazprom has reduced natural gas flows on its Nord Stream-1 gas pipeline to 20% capacity following a review of a Siemens engine, which was refurbished in Canada, sent shock waves through the ‘industry. However, for investors in uranium deposits such as Uranium energy (NYSEARC:CUE) and UEC stock, this news turns out to be bullish today.

The thesis is relatively simple. If European economies are to wean themselves off Russian oil and gas, renewable energy sources are needed. Not only that, but these energy sources should be located in Europe.

One of the key issues dividing these countries today is the discussion around nuclear power. Germany diverted its attention from nuclear power, shutting down its remaining plants just as the Russian invasion of Ukraine began. Today, the rhetoric seems to be changing, at least for the European economic powers.

Let’s see why Uranium Energy is experiencing such a surge of interest today.

UEC stock soars on revitalized hopes of nuclear power

A key supplier of uranium, the key ingredient in nuclear power generation, investors appear to be bullish on Uranium Energy as the tone changes in Europe and other countries. Besides Europe, Japan has also announced plans to restart four other nuclear reactors. Considering many of its reactors were out of service after the Fukushima Daiichi power plant disaster, that says about everything investors want to hear about the safety of next-generation nuclear power.

For Europe, energy policy has become the latest divisive force that increasingly worries investors. European bonds are plummeting as the euro recently reached parity with the US dollar. All things being equal, it looks like the European economy could experience a bigger recession than the US.

One of the main factors behind these fears is the potential for energy rationing in Europe. Energy is needed to produce and sell just about everything. Thus, this decision would amount to rationing the size of an economy. Nuclear power, and the uranium behind it, could be the answer to Europe’s woes.

Although significant long-term investments will have to be made, it is clear that the forward-looking mechanism of the market is pricing in something today. As a result, uranium stocks such as UEC should be on investors’ radar right now.

As of the date of publication, Chris MacDonald had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Chris MacDonald’s love of investing has led him to pursue an MBA in finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative long-term investment outlook.

Comments are closed.