Uranium stocks surge as investors bet on nuclear power amid a power crunch

Published Mon, Oct 18 20215:23 PM EDTUpdated Mon, Oct 18 20219:12 PM EDT

Uranium stocks jumped on Monday, building on this month's gains, as investors bet that the energy crunch in Europe and Asia will give nuclear power a boost. The NorthShore Global Uranium Mining ETF closed 5.5% higher on Monday, and Global X Uranium ETF gained 4.7%. The funds' October gains are now well north of 20%. Prices for the commodity itself, however, have pulled back. On Monday, uranium traded at $31.35 per pound, after breaking above $50 in September. The market is small and so trading volume is light. The Chicago Mercantile Exchange only updates uranium prices once per day, unlike other commodities such as oil, which trade throughout the day. Robert Minter, director of investment strategy at Aberdeen Standard Investments, said investors are interested in the space since nuclear energy, like fossil fuels, can provide baseload power, or electricity 24 hours per day, seven days of week. Solar and wind, on the other hand, are intermittent power sources since their production can't be ramped up at will. Minter said that the surge in nuclear power-related stocks indicates that investors want longer-term exposure to the nuclear theme as the power crunch unfolding around the globe demonstrates the need for energy security. The Global X Uranium fund has seen $170 million in inflows over the last month, and $675 million in inflows this year, bringing its assets under management to $1 billion, according to data from FactSet. The NorthShore fund has attracted about $198 million in the last month, and $603 million in 2021, bringing its total asset base to $847 million. Monday's biggest advancers were names including Lotus Resources Limited , Toro Energy and Consolidated Uranium , all of which have market valuations under $300 million. Among the larger players, National Atomic Company gained more than 4%, while Cameco Corporation advanced 5.9%. NexGen Energy , Paladin Energy and Denison Mines also registered solid gains on Monday. French president Emmanuel Macron last week announced plans to invest 1 billion euros to develop mini modular reactors as part of a larger clean energy push. Japan's prime minister said that it's paramount to restart the country's nuclear power plants, according to Reuters . Uranium stocks attracted interest earlier this year after Sprott Asset Management started aggressively buying the physical asset over the summer, driving up prices for the commodity and companies involved in nuclear power development.

Warning signs are displayed near a uranium mill facility in Utah.

George Frey | Reuters

Uranium stocks jumped on Monday, building on this month's gains, as investors bet that the energy crunch in Europe and Asia will give nuclear power a boost.

The NorthShore Global Uranium Mining ETF closed 5.5% higher on Monday, and Global X Uranium ETF gained 4.7%. The funds' October gains are now well north of 20%.