Profit from Green Shoots in Nuclear
The Japanese China Syndrome was a matter of extremely bad luck and old nukes showing their age under extreme conditions. The new nuke age is upon us, and it's much safer and more reliable-and will continue to grow, writes Benjamin Shepherd of Global Investment Strategist.
For nearly two years, the nuclear industry has had a mushroom cloud hanging over its head. As Germany and a number of other European governments began discussions about abandoning nuclear power in the wake of the Fukushima Daiichi disaster, investors have been leery of anything even remotely related to nuclear power.
A nuclear renaissance is unfolding in the emerging world as China, Russia, and other nations continue building reactors at a rapid clip, because of their low emissions and reliable, long-term operation. Uranium miners represent the purest exposure to this growing demand in nuclear energy.
Miners have been under severe pressure recently, as cheap natural gas in the US has made gas-fueled electricity generation more attractive. Global uranium demand also has dipped slightly due to the shutdown of eight German reactors. That's led several major research firms to downgrade uranium miners, including Cameco (CCJ). However, downgrades of Cameco are shortsighted.
Driving the negative sentiment are low uranium prices, which are off by more than 60% since their highs of four years ago. This weak price environment has pushed several smaller miners out of the market, because their production wasn't economical at current price levels.
Cameco is the largest and lowest-cost uranium producer in the world, on track to produce 36 million pounds by 2018.