Flip on a light switch or appliance in the U.S. and there's an
80 percent chance that the electricity was generated using fossil
But despite the popularity of fossil fuels for electricity
generation, there is now a surge in demand for another form of
energy generation - nuclear.
About 20 percent of the U.S. electricity grid is lit up by
nuclear energy. Here in Vermont for example, the Vermont Yankee
reactor represents over half of the state's total electric
generating capacity. In other parts of the world, especially Asia
and India, nuclear energy is a new necessity in meeting the growing
demand for inexpensive power.
The surge in nuclear power demand could be a boon for investors
that buy the right stocks. In fact, 100 percent or even 1000
percent gains over the next several years are not unheard of.
***Nuclear energy generates headlines when its use is discussed
in countries like Iran and North Korea. But in other countries it's
far less of a controversial energy source. Right now there are 441
nuclear reactors operating in 29 countries - together they produced
2.6 trillion kilowatt-hours of electricity last year.
Over the next 20 years, experts say the worldwide use of nuclear
energy is expected to nearly double. The industry's growth will
create massive demand for uranium - the yellow metal that fuels
nuclear reactors. Already the price of uranium has reached a two
As the Cold War ended and the superpowers backed away from
hoarding nuclear weapons, uranium was re-purposed for peaceful
uses. That helped to suppress uranium prices and minimized the need
to develop new sources.
Yet since March, uranium spot market prices have risen 50
percent, bringing to mind a bullish run-up like that seen in
The interest in nuclear energy means more uranium is needed. And
since much of the world's current supply comes from such unstable
regions as Kazakhstan and Africa, currently operating mines can't
The big unknown in uranium production is China. According to
this Reuters report
, China is looking to expand its nuclear capacity from 11 gigawatts
to 70 gigawatts in the next decade. Chinese officials have said the
country can produce the nuclear fuel that it needs, yet industry
experts predict that China will become more dependent on imported
sources in the years ahead.
Uranium Energy Corp.'s (
plans in south Texas pan out, U.S. production could increase
dramatically. Founded in 2003, the company acquired a portfolio of
mining projects in 2004 and ramped up its potential as a uranium
producer in early November.
The stock has taken off lately, as shares of Uranium Energy
reached a 52-week high of $6.48 on November 26.
Kevin McElroy, editor of Wyatt Investment Research's own daily
has been digging into uranium price trends and mining stocks. He
recommended large cap mining giant
Cameco Corp. (
which operates the world's largest uranium mine, to his readers on
, and reiterated his buy recommendation for Cameco on
. Shares are up 53 percent since his first recommendation, and have
risen 2.5 percent since his reiteration, bucking the trend while
the broad market has slumped.
Cameco is the big dog and has produced healthy investment gains
lately. But the big money will be made small-cap stocks like
Uranium Energy Corporation which has seen shares rise 180 percent
since August 31 - that's more than triple the return of Cameco over
the same time period.
*** Uranium Energy has many small cap competitors:
USEC Inc. (
for instance, supplies low enriched uranium that is used in 150
commercial reactors, and
Uranerz Energy Corp. (Amex: URZ)
is an exploration stage company with properties in Wyoming, Texas,
and Saskatchewan, Canada. Both stocks have seen shares rise,
although not as much as shares of Uranium Energy Corp.
Uranium Energy is following a playbook of proven assets: It
controls heaps of historical mining data, including 40 years' worth
amassed by Kerr-McGee in the U.S. and Australia. All told, Uranium
Energy is sitting on uranium databases covering U.S. exploration in
23 states, primarily in Texas, Arizona and Wyoming. That's a huge
library, and a very valuable asset.
UEC's operations are centered in Texas, a state with a rich belt
of uranium deposits including the Palagana Project which is 100
miles from the company's processing facilities in Hobson. It is
developing three other Texas sites. If the company can deliver
consistent supplies of uranium out of Palagana, its stock could
continue to rise. Profitability, which could come in 2012, would be
another positive catalyst for the stock.
Uranium looks poised for another bull run, and I think companies
like large cap Cameco and small cap Uranium Energy will trade
higher over the next year. As always, please be sure to do your own
research before buying shares of any company I discuss.