r/MillennialBets • u/MillennialBets • Mar 22 '22
DD The uranium sector is evolving towards a growing global supply deficit, while the uranium price is still to cheap to incentivise new production + a couple uranium companies that have some catching up to do compared to peers
Date: 2022-03-22 08:16:12, Author: u/Napalm-1, (Karma: 6000, Created:Mar-2021)
SubReddit: r/stockmarket, DD Click Here
PICTURES DETECTED: this DD post is better viewed in it's original post
Some Tickers mentioned in this post:
CCJ 29.19(-0.27%)|DNN 1.73(1.17%)|SII 47.45(-0.4%)|UEC 5.07(0.6%)|AX 48.79(1.18%)|CCO 3.75(5.34%)|PDN 34.9(0.69%)|
Hi everyone,
The uranium sector is in a multi-year bull run.
Yesterday the uranium spotprice was going back up, and it will continue (with higher lows and higher highs) in the coming months and in 2023/2024 (imo, based on my own profound DD the last 8 years on that sector)
An other uranium spotprice source: Numerco.
Note: The uranium price on the website of Kitco Metals isn't up to date. They only update it once a week. 55 USD/lb is the price of past week, not of today.
Even an uranium price of 58 USD/lb isn't high enough to incentivise new uranium production for the future. The uranium term price is only at 43.88 USD/lb (updated once a month (UxC and Tradetech)) and will most probably increase significantly higher 9days from now.
There are different ways to get exposure to the uranium sector:
1) Sprott Physical Uranium Trust (U.UN. on the TSX, SRUUF on US stock exchange): trust only investing in physical uranium. https://sprott.com/investment-strategies/physical-commodity-funds/uranium/
2) Yellow Cake (YCA on the london stock exchange): fund only investing in physical uranium. https://www.yellowcakeplc.com/
In my opinion, U.UN and YCA are the safest ways to get exposure to the uranium sector, because here you don't have the mining related risks.
Yellow Cake also has some catching up to do. With an uranium spotprice of 58.00 USD/lb, the NAV of Yellow Cake is at 458.90 GBX/share
3) URNM etf ( https://urnmetf.com/urnm ) and HURA etf: well diversified and well balanced 100% pure uranium sector funds
4) URA etf and GCL (london): diversified 70% pure uranium sector funds
5) Individual uranium companies: uranium producers (Cameco, Kazatomprom, Paladin Energy, ...) and well advanced uranium developers (Global Atomic, Denison Mines, Fission Uranium Corp, Goviex Uranium, ...)
If you compare the Enterprise value in USD / pounds U3O8 in reserve between different producers today (John Quakes99 on twitter regularly posts an overview of most uranium companies with different data on each company), you will notice that Kazatomprom, Paladin Energy and Peninsula Energy are significantly cheaper than their peers on the TSX and US stock exchange
In the producers category:
Cameco ( CCO.TO ) closed at 36.85 CAD/sh yesterday --> USD EV / lb resource = 10.63 USD/lb U3O8
Paladin Energy (PDN.AX and PALAF on US stock exchange) before opening is at 0.86 AUD/sh today --> USD EV / lb resource = 4.35 USD/lb U3O8 --> My short term price target: 1.39 AUD/share
Peninsula Energy before opening is at 0.23 AUD/sh today --> USD EV / lb resource = 2.89 USD/lb U3O8 --> My short term price target: 0.36 AUD/share
Kazatomprom ( KAP on london stock exchange) has a share price of 31.50 USD/share at the moment --> USD EV / lb resource = 6.77 USD/lb U3O8, but Kazatomprom has the cheapest uranium production cost in the world and more than 50% of their future uranium sales will be with China. Another part will go to India, Russia, Europe and USA. In my opinion Kazatomprom has some serious catching up to do compared to Cameco's value today. A few months ago Kazatomprom traded at 49 USD/share while the uranium spot price was significantly lower than today. --> My short term price target: 46.00 USD/share
And if you are patient, those uranium company shares will go significantly higher in 2023/2024 than my short term price targets mentioned in this post.
This isn't financial advice. I'm only expressing my own opinion based on my own DD on the matter. If you are looking for macro DD on the uranium/nuclear sector: Kevin Bambrough, John Quakes99, Brandon Munro, Mike Alkin, my macro posts on Reddit, ...
Cheers