We recently compiled a list of the 10 Best Uranium Stocks to Invest in Now. In this article, we are going to take a look at where enCore Energy Corp. (NASDAQ:EU) stands against the other uranium stocks.
The global demand for uranium is accelerating, driven by advancements in artificial intelligence (AI) and the electrification of industries. According to research from Goldman Sachs, data center energy consumption is expected to surge by 160% by 2030. Nuclear power, with its ability to deliver consistent and low-carbon electricity, is emerging as the preferred solution to meet these energy demands. Tech giants have publicly recognized the role of nuclear energy in supporting their operational energy needs.
In November 2024, the Biden administration unveiled a plan to triple U.S. nuclear energy capacity by 2050. This plan includes the deployment of 200 GW of new nuclear capacity through new reactor construction, plant restarts, and facility upgrades. In the short term, the administration aims to bring 35 GW of new capacity online by 2035.
Following the domestic nuclear energy deployment targets by the Biden administration, Russia announced restrictions on the export of enriched uranium to the United States. According to the Russian Government, these temporary restrictions are a response to the U.S. ban on Russian uranium imports, which was signed into law earlier in 2024. However, the U.S. ban includes waivers that allow shipments to continue until 2027 to address supply concerns. According to Reuters, Russia is a major player in the global uranium market and produces about 44% of the world’s uranium enrichment capacity. In 2023, 27% of the enriched uranium used by U.S. commercial nuclear reactors was imported from Russia.
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In an interview with CNBC on December 12, 2024, John Ciampaglia, CEO at Sprott Asset Management, discussed the current state and future prospects of the uranium market. Ciampaglia acknowledged that despite high demand, there has been no major increase in the production of uranium. He explained that this is a strategic decision rooted in supply discipline, a lesson learned when the industry was struggling to survive for nearly 10 years after the accident in 2011 at the Fukushima Daiichi Nuclear Power Plant in Japan. Ciampaglia noted that producers are now cautious about balancing future production with future demand, ensuring that they have built their contract books with utilities before ramping up production. This approach is aimed at maximizing value and revenue in the current market cycle.
Ciampaglia identified three major drivers: growing electricity consumption in emerging markets such as China and India, the pivot of Western countries toward energy security and decarbonization, and the development of small modular reactors (SMRs). He noted that big tech companies are investing in SMR technology, which is crucial for validating and advancing this technology. This investment is expected to boost the demand for uranium.
Ciampaglia also mentioned the gradual recovery of uranium prices, which had been stagnant in 2019 and 2020. The price is now slowly moving up, both in the spot market and the term market, reflecting the building demand. Higher prices are necessary to incentivize miners to expand production and develop new mines, which is essential for meeting the growing demand for uranium in the coming years.
As the world leans heavily on nuclear energy to power the next phase of technological and industrial advancements, uranium will remain a critical resource.
Our Methodology
For this article, we used Finviz and Yahoo stock screeners to find companies that are involved in the mining, trading, or processing of uranium. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks with the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
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).
An aerial shot of the uranium mines, demonstrating the company’s vast mineral resources.
enCore Energy Corp. (NASDAQ:EU)
Number of Hedge Fund Holders: 12
enCore Energy Corp. (NASDAQ:EU) is a leading uranium producer in the United States, dedicated to providing clean, reliable, and affordable fuel for nuclear energy. The company operates two In-Situ Recovery (ISR) Uranium Central Processing Plants in South Texas, the Rosita and Alta Mesa projects.
enCore Energy Corp. (NASDAQ:EU) is actively engaged in resource development and exploration activities across its project areas. In South Texas, the company has been conducting resource development drilling at the Upper Spring Creek ISR Project to confirm uranium mineralization and explore for roll fronts that may extend from the planned wellfield. Following the approval of the Class III Underground Injection Control (UIC) permit, enCore Energy Corp. (NASDAQ:EU) has begun installing monitor well rings and baseline wells for the first wellfield at the Upper Spring Creek Project. The project is planned to include a satellite ion exchange facility and wellfield that will feed the Rosita Central Processing Plant, which will enhance the company’s operational efficiency and production capacity.
enCore Energy Corp. (NASDAQ:EU) is also focusing on expanding its operational capacity through the commissioning of new processing plants and the development of additional wellfields. The company recently commissioned the Alta Mesa ISR Uranium Central Processing Plant. This new plant, along with the existing Rosita Central Processing Plant, will significantly increase the company’s production capabilities.
Overall EU ranks 6th on our list of the best uranium stocks to invest in. While we acknowledge the potential of EU 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 EU 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 at Insider Monkey.