Spot price forecasts
Investors should continue to keep an eye on Japan as any real improvement in the market isn't expected until the nation's newly elected leaders show they're serious about restoring its nuclear power program — once responsible for about 10 percent of global uranium demand.
Analysts expect demand to start to exceed supply in 2014. In late 2013 or early 2014, we may begin to see the current spot price more in step with the strong long-term price ($60/lb), Dennis da Silva, a resource fund manager at Middlefield Capital, told the Financial Post. UBS (NYSE:UBS) is looking for prices to return to $50/lb in 2013 and $55/lb in 2014, while Credit Suisse (NYSE:CS) has issued a much more bullish outlook, indicating that uranium should trade in a range of $80/lb to $90/lb for 2013. JP Morgan, equally bullish, anticipates a range of $78/lb to $85/lb.
Uranium mining stocks have taken a serious beating over the past few years, and 2012 was no different. The Global X Uranium ETF (ARCA:URA) — which includes industry heavies such as Cameco (TSX:CCO,NYSE:CCJ), Paladin Energy (TSX:PDN,ASX:PDN), Uranium One (TSX:UUU) and Denison Mines (TSX:DML,AMEX:DNN) — finished the year down nearly 20 percent.
The consensus among analysts is that uranium shares remain highly undervalued and, in light of the significant looming supply gap, offer huge upside potential for risk-tolerant investors willing to bet that nuclear power has a crucial role to play in meeting the world's growing energy needs.
Below is a selection of uranium companies on the lips of most analysts today:
Cameco is one of the world's largest uranium producers and nuclear fuel suppliers, accounting for nearly 16 percent of world U3O8 production from its mines in Canada, the US and Kazakhstan. The company recently acquired BHP Billiton's (ASX:BHP,NYSE:BHP,LSE:BLT) Yeelirrie uranium project in Western Australia.