Uranium Investors Overreacted to China’s Nuclear Leak News

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Investors may want to use weakness in uranium stocks as an opportunity.

Days ago, uranium stocks took a hit on news of a leak at a Chinese nuclear plant.

According to CNN, “The US government has spent the past week assessing a report of a leak at a Chinese nuclear power plant, after a French company that part owns and helps operate it warned of an imminent radiological threat.”

However, it appears markets overreacted to the news.

As noted by The Wall Street Journal, “Monday’s drop looks like an outsize reaction for several reasons. Uranium mining companies tend to operate on multiyear supply contracts with utilities, so there is little risk that a nuclear power plant would immediately pull back buying from these mining companies.”  In addition, there is no evidence of actual danger, with abnormal radiation, they added.

Helping, the Biden Administration may establish a reserve that can could boost mining and nuclear energy potential.  Energy Secretary Jennifer Granholm said her department would take a step this month toward establishing the reserve, added The Hill.  “We’re about to issue a request for information [RFI] regarding establishing a reserve.”

With the overreaction, and the potential for a reserve, some of the top uranium stocks to consider are Cameco (CCJ), Uranium Energy (UEC), Energy Fuels (UUUU), and the Global X Uranium ETF (URA), which pulled back to $22.52 a share.

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