We recently compiled a list of 7 Best Uranium Stocks To Buy According to Hedge Funds. In this article, we will look at where Ur-Energy (NYSE:URG) ranks among the best uranium stocks to buy according to hedge funds.
Uranium Market Outlook
According to a report by the World Nuclear Association, the uranium market is a complex and cyclical industry, with prices fluctuating based on demand and supply. In recent years, primary production from mines has supplied around 90% of the requirements of power utilities, with the remaining 10% coming from secondary sources such as ex-military material, recycling, and stockpiles. The demand for uranium is driven by the need for fuel to power nuclear reactors. There are currently around 440 reactors worldwide, with a combined capacity of around 390 GWe. These reactors require around 80,000 tonnes of uranium oxide concentrate each year, which contains around 67,500 tonnes of uranium.
The uranium supply comes from various sources, including mines, stockpiles, and secondary sources, such as recycled uranium and plutonium. In 2022, mines supplied around 58,201 tonnes of uranium oxide concentrate containing around 49,355 tU, around 74% of the utilities’ annual requirements. Secondary sources of uranium include recycled uranium and plutonium from used fuel, re-enriched depleted uranium tails, ex-military weapons-grade uranium, and civil stockpiles. These sources, such as mixed oxide (MOX) fuel, can be converted into usable fuel.
The demand for Uranium is expected to grow over the next decade. The World Nuclear Association’s Nuclear Fuel Report indicates a 28% increase in uranium demand over 2023-2033 and a 51% increase in uranium demand for 2031-2040. However, the uranium market faces several challenges, including the need for increased investment in new mines and infrastructure, as well as similar policies that give preferential to subsidized wind and solar sources. There are growth opportunities, particularly in nuclear energy, which is expected to play a key role in reducing carbon emissions and meeting increasing global energy demands.
Big Tech Investments in Nuclear Energy to Drive Sector Growth
In an interview on September 24 with CNBC, Amir Adnani, CEO of Uranium Energy, said that he is highly optimistic about the future of uranium investing. He believes that the uranium market is finally emerging from an 11-year bear market and is experiencing a renaissance. This newfound enthusiasm for uranium is driven by the growing recognition that nuclear power is crucial in the global effort to achieve carbon neutrality by 2050. As the world becomes increasingly aware of the need to reduce its reliance on fossil fuels and transition to cleaner forms of energy, nuclear power is being rediscovered as a vital part of the solution.
Adnani notes that public opinion polls are now at an all-time high in support of nuclear power, indicating a significant shift in the public’s perception of this form of energy. Furthermore, big tech companies are beginning to take notice of the potential of nuclear energy and are starting to partner with nuclear energy companies to invest in new infrastructure. This influx of capital and expertise is expected to have a profound impact on the industry, driving innovation and growth in the sector. The demand for nuclear-generated electricity is increasing exponentially, driven by the development of data centers and cloud computing. This surge in demand is causing U.S. utilities to extend the life of reactors and bring back previously retired reactors, which in turn is driving up the market for uranium.
However, Adnani also acknowledges concerns about the potential for big tech companies to drive up prices for households using power. This is a valid concern, as the increasing demand for nuclear-generated electricity could potentially lead to a supply shortage, driving up prices for consumers. Nevertheless, Adnani believes that this is a manageable risk and that the benefits of investing in uranium far outweigh the potential drawbacks. He notes that the utilities need to invest upward of $50 billion to keep up with the growing demand for nuclear-generated electricity, which presents a significant opportunity for investors.
The uranium market is expected to experience significant growth over the next decade due to the growing demand for nuclear energy and an increasing need for low-carbon energy sources. The uranium market is poised to play a critical role in meeting global energy demands. With that in context, let’s take a look at the 7 best uranium stocks to buy according to hedge funds.
Our Methodology
To compile our list of the 7 best uranium stocks to buy according to hedge funds, we used the Finviz and Yahoo stock screeners to find the 9 largest Uranium companies. We then narrowed our choices to 7 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Ur-Energy (NYSE:URG)
Number of Hedge Fund Investors: 13
Ur-Energy (NYSE:URG) is a low-cost operating uranium mining company that identifies, acquires, explores, develops, and operates uranium projects. The company has established itself as a key player in the uranium industry, with a focus on in-situ recovery (ISR) uranium mining. The company’s Lost Creek facility in south-central Wyoming has produced approximately 2.8 million pounds of U3O8 since its commencement of operations in 2013.
Ur-Energy (NYSE:URG) is expanding its operations with the development of two uranium projects, Lost Creek and Shirley Basin. On September 18, the company announced that its Lost Creek project is currently in the ramp-up phase, with five header houses coming online in 2024. The most recent header house, HH2-10, came online in mid-August, and HH2-11 is expected to come online this month. The average production solution headgrade in August was 67.1 mg/L, which is a positive indicator of the project’s performance. The company has also made five shipments to the conversion facility this year, with the most recent shipment arriving on September 11.
Despite some challenges, the Lost Creek project is making progress. The company has 15 drill rigs on site, with additional rigs pending, and plans to redirect some of these rigs to exploration projects within the Great Divide Basin to replace mined pounds with new uranium resources.
The Shirley Basin project, on the other hand, is still in the development phase. The installation of monitor wells for the first mine unit is on schedule. The company expects to finalize well completions in the coming days and has three drill rigs working at Shirley Basin, which will be redeployed to Lost Creek when the completion work concludes. The company plans to collect baseline water quality and perform hydrologic aquifer tests this fall and expects construction at Shirley Basin to be complete in late 2025.
With a growing presence in the uranium market and ongoing projects, Ur-Energy (NYSE:URG) is well-positioned to capitalize on the increasing demand for uranium. In the second quarter, the company’s stock was held by 13 hedge funds with stakes worth $51.49 million. Azarias Capital Management is the largest shareholder in the company, with a stake worth $22.91 million as of June 30.
Overall URG ranks 5th on our list of the best uranium stocks to buy according to hedge funds. While we acknowledge the potential of URG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than URG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure. None. This article is originally published on Insider Monkey.
