Back in July we wrote that uranium stocks were bouncing back after the March tsunami in Japan laid waste to a Fukushima nuclear plant. The news for uranium has since gotten better, even while most uranium stock continue to fall.
Demand for uranium is starting to return after the tragedy in Japan prompted the closing of 14 nuclear reactors in that country as well as Germany and made uranium one of the most hated elements in the world. Last month Australia’s federal government lifted a ban on sales of the element to India, one of the world’s fastest growing uranium markets.
Demand in China is growing as well. China’s Guangdong Nuclear Power Group just made a $990 million bid to buy Kalahari Minerals, which controls the world’s fourth-largest uranium deposit in Namibia.
Dozens of nuclear power plants are still under construction in other emerging markets too. That’s good news for Canada’s Cameco (NYSE: CCJ), the biggest uranium producer in the world. The company plans to raise its annual output of U308 to 40 million pounds by 2018. Cameco produced 22.8 million pounds of U308 last year.
Another uranium stock that stands to benefit as nuclear power fears begin to ease is Denison Mines Corp. (AMEX: DNN), which along with Cameco was trading at its highest level in nearly three years before the disaster in Japan hit. Uranium Energy (AMEX: UEC) and Uranerz Energy (AMEX: URZ) are other uranium stocks that could benefit from any recovery in the sector.
Overall, it has been a rough year for uranium stocks. Cameco shares have fallen 58%, to $18.20 a share, since their February highs of $43.59. Denison's stock has fallen 67%, Uranium Energy 56% and Uranerz Energy 69% in that same time period. That’s taking it on the chin.
But with demand returning to their pre-tsunami levels, and the wounds from Japan’s nuclear disaster starting to heal, this may be a good time to snatch up uranium stocks while they're cheap.