Are Uranium Energy Stocks Millionaire Makers?
There’s no question about that. Uranium Energy (UEC 3.54%) It could have made an investor a millionaire.
In 2020, the stock traded for less than $0.40 per share. Last month, the stock price exceeded $8. If you timed it perfectly, your $46,000 investment could have turned into a $1 million fortune in just four years.
Of course, it is impossible to accurately predict market times at will, and it is impossible to recreate the past. And not everyone has $46,000 to spend. So the question of the day is whether Uranium Energy stocks can become millionaire stocks again, preferably using as small an initial investment as possible.
UEC data from YCharts
Take advantage of a multi-billion dollar opportunity
Something big is happening now. That is, a global shift in energy production that is attracting trillions of dollars of capital.
According to Fatih Birol, Director-General of the International Energy Agency (IEA), every dollar invested in fossil fuels today is equivalent to about $1.70 in clean energy investments. “Five years ago this ratio was 1 to 1,” he was quoted as saying in an IEA press release.
According to the IEA, global investment in energy-related projects is expected to total $2.8 trillion in 2023, with clean energy expected to account for $1.7 trillion.
Where does all that money go? A huge proportion is dedicated to wind and solar, while the remainder is spread across various sectors such as heat pumps, electric vehicles, grid upgrades and nuclear energy.
In the 2010s, annual global investment in nuclear technology was approximately $30 billion. Some analysts expect annual investments to reach $100 billion over the next few years. If that’s true, the next decade will present tens of billions of dollars worth of opportunities for companies like Uranium Energy that are focused on nuclear power.
The company has 866,000 pounds of uranium on hand, purchasing it at an average price of $49 per pound. It also signed a contract to purchase an additional 1.3 million pounds of uranium at about $46 per pound. With uranium prices now exceeding $80 per pound, the company is enjoying huge unrealized profits.
Uranium Energy doesn’t just have uranium stocks. It also has interests in several uranium mines across North and South America. Management bills itself as “the fastest-growing North American uranium company.” In many ways, that’s true. The company has 329 million pounds of measured and estimated uranium at its sites. This represents a 200% increase compared to 2021, driven by several acquisitions.
As with other mining operators, much of its resource base is not economical to extract. But the takeaway is clear. A bet on Uranium Energy stocks is a direct bet on increased demand for uranium and therefore higher prices, and that bet makes sense to me.
A surge in clean energy investment around the world has led to a renaissance in nuclear power. Permits for older reactors have been extended, premature plant closures have been canceled, and new reactors are expected to come online in places like India and China.
Tim Gitzel – CEO of Uranium Energy Competitors Cameco — “We’re seeing governments and companies returning to nuclear with an appetite we haven’t seen in 40 years in this industry,” he said on a conference call with analysts in October 2022.
It could take years, if not decades, to bring new mining supply online. As a result, the gap between supply and demand has grown, causing uranium prices to rise significantly over the past two years, which has had a significant impact on Uranium Energy’s stock price.
Image source: Uranium Energy’s February investor presentation.
Is it time to buy Uranium Energy stocks?
Investing in mining companies can be an easy way to bet on commodity prices in a leveraged manner.
For example, if the price of uranium goes from $50 per pound to $100 per pound, that is a 100% increase. Meanwhile, a mining company might have made a profit of $10 per pound at a price of $50 per pound. However, at a price of $100 per pound, the profit increases to $60 per pound. That’s a 500% increase!
A comparison of Uranium Energy’s stock price with the price of the uranium commodity demonstrates this and investor optimism. Over the past five years, uranium prices have risen nearly 200%, while Uranium Energy’s stock price has soared more than 450%.
UEC data from YCharts
How much can uranium prices rise? In 2007, uranium prices peaked at about $140 per pound, an 80% premium over current prices. If the global supply and demand gap widens further, it would not be difficult for prices to surpass previous highs.
Uranium energy stocks have experienced strong tailwinds since 2020. Commodity stocks in general can be volatile, but the next few years appear to be friendly for the company. Eventually, a rising tide will lift all boats, and the clean energy tidal wave will likely continue to build steam.
But can Uranium Energy stocks make millionaires for those who buy right now?
Most of the easy profits seem to be behind us. The market has caught up to the new possibilities of nuclear power and priced stocks accordingly.
Mining $1 million over several years with a small initial investment is unlikely to be in the future for investors with this stock. However, Uranium Energy stocks still appear to be a good buying opportunity for patient investors.
Few stocks have a huge 10-year growth runway, but that’s exactly what you’re getting here. You won’t become a millionaire overnight, but investing regularly in Uranium Energy stock over the long term can help your portfolio exceed $1 million.
