3 uranium stocks to buy in April for ‘nuclear’ growth

The uranium price is rising as investors bet on nuclear power. These related stocks could be big winners, argues Roland Head.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image of person checking their shares portfolio on mobile phone and computer

Image source: Getty Images.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Key Points

  • One big FTSE 100 uranium stock has an 8% dividend yield
  • I also highlight a pureplay linked to the uranium price

The uranium price has surged in recent months due to new interest in nuclear power as a solution to the need for reliable, zero-carbon energy. I reckon uranium stocks could be winners if we see a long-term increase in demand for the nuclear fuel.

One exciting development is the creation of small modular reactors. These could be used to build smaller, cheaper nuclear power stations. That could speed up nuclear growth and boost demand for uranium.

I’ve been hunting for uranium shares to add to my portfolio. Here are three I’d consider buying today.

Should you invest £1,000 in BHP right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BHP made the list?

See the 6 stocks

A top uranium producer

For a big uranium producer with an attractive dividend yield, I’d choose mining giant BHP (LSE: BHP). The company’s Olympic Dam mine in Australia is best known for its copper, but also contains a lot of uranium.

BHP produced nearly 2,300 tonnes of uranium concentrate in 2021. I estimate it’s one of the world’s top five producers of the nuclear fuel.

The main downside of BHP as a uranium stock is that much of the group’s profit comes from iron ore and other materials. This means the rising uranium price will only have a limited impact on earnings.

However, BHP shares currently offer a forecast dividend yield of more than 8% and look quite reasonably valued to me. This is a stock I’d be happy to own in my portfolio.

A nuclear fuel business

One uranium stock that should benefit directly from higher prices is US firm Cameco (NYSE: CCJ). This £8bn firm is listed on the New York Stock Exchange, but I’d be able to buy it through my UK share dealing account.

Cameco owns a number of uranium mines and also produces nuclear fuel for use in power stations. Interestingly, the company is keeping some of its mines idle. From what I can tell, management is playing a long game and betting on higher uranium prices in the future.

Cameco looks promising to me as a long-term play on nuclear power. My main concern is that this business has not been very profitable in recent years. Despite higher uranium prices last year, the company reported a $100m loss for 2021.

Broker forecasts suggest that by 2023, sales will rise to $2.1bn while profits will reach $180m. However, that still leaves the stock valued on 36 times forecast earnings, which seems a little pricey to me.

I reckon Cameco has potential as a long-term investment, but I’d prefer to wait for a better buying opportunity.

Pureplay uranium stocks

The world’s biggest uranium producer is Kazakhstan firm Kazatomprom. Although I can buy shares in this company on the London market, Kazatomprom is still 75%-owned by the Kazakh state wealth fund. For me, it’s just too risky.

Instead of buying Kazatomprom shares, I’d consider buying into Yellow Cake (LSE: YCA). This is a uranium trading and investment business with a long-term contract to buy uranium from Kazatomprom.

Yellow Cake’s profits depend on movements in the uranium price. But the company reported a profit of $172m for the six months to 30 September 2021, based on the increased value of its uranium assets.

I’d consider buying Yellow Cake shares to bet on long-term uranium price growth.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Is now a good time to start investing in the stock market?

Predicting what the stock market will do in the next few weeks and months is nearly impossible. But over the…

Read more »

Close-up as a woman counts out modern British banknotes.
Investing Articles

£5,000 invested in Legal & General shares 10 years ago would have generated passive income of…

Legal & General shares are one of the highest-yielding in the FTSE 100. How much passive income could have been…

Read more »

Passive income text with pin graph chart on business table
Dividend Shares

3 world-class dividend stocks to consider for passive income

These three stocks could potentially help investors create a stable – and growing – stream of passive income in the…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

Diageo’s share price plunges 43% in 2 years! Time to consider buying the dip?

With sales falling, the Diageo share price is being hit hard. But with the shares now trading near 52-week lows,…

Read more »

Night Takeoff Of The American Space Shuttle
Investing Articles

The GGP share price skyrockets 100%+ in 2025 – Could this be the breakout stock of the year?

With the GGP share price more than doubling in four months, can Greatland Gold continue to thrive throughout the rest…

Read more »

Illustration of flames over a black background
Investing Articles

JD Sports’ share price soars 27% in just 3 weeks – is this the hottest stock to consider buying now?

The JD Sports share price is rising rapidly as management steers the business back on track. Can this upward momentum…

Read more »

Nottingham Giltbrook Exterior
Investing Articles

The Marks and Spencer share price stumbles on a cyberattack! Is it time to panic?

A disruptive cybersecurity breach has brought down Marks & Spencer’s online store, sending the share price tumbling. Should investors be…

Read more »

piggy bank, searching with binoculars
Investing Articles

Down 32%, this FTSE stock now has a 12% dividend yield!

With one of the highest yields in the FTSE 350, is this emerging markets investment firm a screaming passive income…

Read more »