9 Best Uranium Stocks to Buy in 2023

Over the last year, uranium stocks have attracted a great deal of investor attention as demand for the radioactive element has begun to climb.

Although commodity stocks are almost always cyclical, there could be a significant opportunity for investors in the uranium market over the next several years. Here are nine of the top uranium stocks you should know about.

Why Invest in Uranium Stocks?

Although nuclear power is often a divisive topic, the energy source is beginning to see a resurgence as climate change and fossil fuel supply issues force countries to look for alternatives.

Uranium prices are expected to rise throughout 2023, creating opportunities for investors to profit from uranium stocks.

The trend toward greater use of nuclear energy could continue for several more years and support higher prices for the foreseeable future.

BHP Group

Formerly known as BHP Billiton, BHP Group (NYSE:BHP) is a massive mining company based in Australia.

BHP is far from a uranium pure-play, as the company extracts everything from iron ore to gold at various mining sites scattered all over the world. The company does, however, engage in the production of uranium as a secondary product at some of its mines.

BHP has recently invested in a project accelerator program geared toward the next generation of necessary metals. As part of this program, BHP seeks to identify and exploit new reserves of uranium and lithium. Through this accelerator, BHP could gradually become a key investor in new uranium projects worldwide.

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BHP is also virtually unmatched in its uranium production volume. In 2022, the company’s output of uranium was nearly 2.4 million metric tons. It’s worth noting, however, that this was actually a significant decrease from the previous year’s output.

Prior to 2022, BHP had produced well over 3 million metric tons of uranium annually for over a decade. As global demand rises, BHP will likely need to bring new sites online to regain and eventually surpass its previous production highs.

At the time of this writing, BHP also showed promise as a value buy. At a price-to-cash-flow ratio of just 3.23 and a price-to-earnings ratio of 9.88, there’s a strong argument to be made that the stock is currently undervalued. BHP’s earnings are also expected to increase modestly over the coming 12 months to reach a total of $6.10 per share.

Cameco

Cameco (NYSE:CCJ) is another of the world’s leading uranium producers. The company’s estimated annual output capacity exceeds 30 million pounds, while the proven reserves at its sites currently stand at 469 million pounds.

Many of the company’s projects focus on the uranium-rich Athabasca Basin of Saskatchewan, Canada. Cameco has additional uranium mining interests in the United States and Kazakhstan.

Investments in other mining firms have also added Australian exposure to Cameco’s portfolio.

In addition to being a focused play on uranium, Cameco appears to have strong fundamentals as a growth buy. The company’s earnings are expected to grow by nearly 75 percent over the coming 12 months, resulting in a forward P/E ratio of 22.6.

A crucial factor for Cameco’s growth potential is its ability to scale production in response to rapidly rising demand. In 2022, for instance, the company was able to increase its output by 70 percent over the previous year.

Encouragingly, Cameco appears to be prepared to further increase its output in the coming years. In the company’s Q4 report, management outlined plans to raise production at both the Cigar Lake and McArthur River sites in 2024. In 2022, the company signed a record number of contracts for a total of 80 million pounds of its uranium products.

Uranium Energy

In the mining sector, extraction costs have a huge impact on the profitability of projects. For this reason, Uranium Energy (NYSE:UEC) focuses on in-situ recovery (ISR) mining. The company primarily focuses on sites in the American Southwest, many of which have previously been explored by larger, more mature energy companies.

Although Uranium Energy has not yet achieved reliable profitability, the company’s future could be quite promising. The company currently has the capacity to produce a maximum of 8.5 million pounds of uranium per year, and that number will likely only increase as more projects in its pipeline begin to come online.

Operating at maximum capacity, Uranium Energy could more than double the total mining output of uranium in the United States.

Last year, Uranium Energy earned $0.07 per share. This year, the company is expected to lose $0.05 per share. The possibility of short-term losses has recently led to a trend of overselling, creating a potential buying opportunity for investors while prices remain low.

Analyst price targets for the coming year universally imply a potential upside of well over 100 percent for this stock, though investors should be aware that UEC may be subject to high levels of volatility in both directions.

NexGen Energy

Due to the increasing demand for uranium, many of the stocks investors are eyeing in this space are early-stage mining companies. One such stock is NexGen Energy (NYSE:NXE).

NexGen is something of a unique company, as it has no current revenues but is working on the largest uranium development project in Canada. This project, dubbed Rook I, could produce up to 29 million pounds of uranium annually for its first five years in operation.

While NexGen could have a long road to bringing Rook I online, the company appears to have the financial resources necessary to continue operations until it can begin generating revenue. NexGen’s current ratio stands at 8.7, indicating a very strong cash position relative to current obligations.

Despite NexGen’s potential, investors should keep in mind the high risks of investing in exploratory mining companies. While the companies that do successfully exploit new reserves of metals can generate enormous returns, most will never get that far.

This risk is reflected in NexGen’s currently low share price that technically makes it a penny stock (official definition is when it trades under $5 per share). The Rook I project appears to have massive potential, but the stock is still only suitable for investors comfortable with high levels of risk.

Energy Fuels

Energy Fuels (NYSE:UUUU) is another company engaged in mining uranium. In the case of Energy Fuels, however, the company is already generating revenues. The company’s sales over the past 12 months totaled $12.5 million, a number that could rise rapidly as its production capacity increases.

In 2022, Energy Fuels produced 162,000 pounds of uranium and signed three long-term contracts for its future supplies. The company was also able to sell a total of 300,000 pounds to the US Uranium Reserve, which could prove to be a lucrative future customer for Energy Fuels. Energy Fuels still has an inventory of over 1 million pounds of uranium, giving it ample room to sell its products into a market offering higher prices.

Energy Fuels also has the advantage of being one of very few domestic companies engaged in rare earth metal mining. In 2022, the company’s total rare earth metal oxide output was 95 metric tons.

A recent acquisition of a Brazilian mine site could soon bolster this output, allowing Energy Fuels to benefit from growing demand for rare earth elements.

Global X Uranium ETF

Although uranium stocks could have a great deal of room to run, newer investors may not be comfortable selecting individual mining companies. For these investors, a uranium-focused fund like the Global X Uranium ETF (NYSE:URA) may offer the best balance of exposure and diversification.

The URA ETF includes 47 different holdings that span the entire uranium industry. While the ETF has a fairly tight focus on mining, it also includes processing companies and firms that manufacture equipment required for uranium production. URA currently holds a total of $1.32 billion in assets.

One factor investors should be aware of about URA is that its holdings are quite concentrated. Cameco, for example, accounts for over 26 percent of the fund’s assets.

As such, the performance of URA is highly correlated to the success of Cameco and a handful of other holdings. Investors who are generally bullish on uranium but want a more diverse portfolio, however, may still benefit from the basket of stocks included in this fund.

Uranium Royalty

Uranium Royalty (NASDAQ:UROY) is a somewhat unique company whose strategy is to build exposure to uranium prices without the costs and constraints associated with mining operations.

Uranium Royalty achieves this by investing in royalty-generating uranium projects around the world. The firm also invests in mining streams, agreements in which the company locks in a favorable price for future mineral products in exchange for up-front funding.

UROY has yet to generate revenue or earnings from its investments. As such, it should be understood that the stock is highly speculative. The company’s model, however, may have its merits in the long run if uranium prices continue to rise. Uranium Royalty has made investments in 18 projects, including some operated by Cameco and Uranium Energy.

It’s also worth noting that Uranium Royalty has begun to attract institutional interest. Over the last fiscal year, institutional inflows have outpaced outflows by nearly 2-to-1. This may reflect a belief among institutional investors that the company could generate outsized returns over the long run by profiting from higher uranium prices while avoiding costly direct mining operations.

Denison Mines

For investors who are willing to take the risk of investing in exploratory mining projects, Denison Mines (NYSE:DNN) could offer considerable potential reward. The company is engaged in developing projects in the Athabasca Basin, the same region that produces much of Cameco’s uranium output.

Denison Mines’ largest project is the development of two mines at the Wheeler River site. The estimated total reserves for this site total 109.4 million pounds. When fully operational, the site is expected to produce 6 million pounds per year.

Due to the easily accessible nature of one of the identified deposits, the costs for the project are projected to be quite favorable.

Overall, Denison expects an operating margin of 89 percent at one mine and 77 percent at the other.

Ur-Energy

Ur-Energy (NYSE:URG) is a uranium exploration company that is expected to achieve profitability this year. The company’s earnings are projected to rise from a loss of $0.01 per share to a profit of $0.07.

Ur-Energy’s main mining site is the Lost Creek project, which has produced 2.7 million pounds of uranium since operations began in 2013.

Although Ur-Energy shows a great deal of promise, the stock is also quite risky. Trading at less than $1 per share, Ur-Energy could see massive gains or substantial losses in the coming 12 months. Analysts consensus is $2.25, which would result in a gain of over 145 percent.

Choosing the Right Uranium Stocks for Your Portfolio

As you can see, uranium stocks can range from very safe, conservative companies to highly speculative ventures. The right stocks for your portfolio will depend largely on your goals and risk tolerance. For most investors, stocks like BHP and Cameco will likely be the best choices, as these companies are established and profitable businesses. As uranium demand grows, these large concerns will be well-positioned to see steady growth as a result.

Highly risk-tolerant investors may prefer to invest in more speculative exploration companies. As with any high-risk stock, it’s important to keep these positions small so as to balance off the risks and rewards. These stocks are much more likely to result in losses than the large, conservative mining firms. Those that do develop mining projects successfully, however, could generate outsized returns as a result.

Investors who don’t feel comfortable selecting individual stocks can still use uranium ETFs like URA to benefit from increasing uranium prices. These funds may underperform individual companies, but the diversification they offer can also protect your portfolio from concentrated risk.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.