Given continued tensions with its global adversaries and economic competitors, such as China and Russia, the U.S. is heavily invested in improving its nuclear stance, which has implications for the electrical and defense industries. As part of this, the U.S. Congress recently signed the American Nuclear Infrastructure Act to expand its nuclear expertise and increase the domestic production of uranium.

The United States’ tension with Iran is a contributing factor as well. Sour relations between the two countries in addition to the expiration of a UN arms embargo on Iran is leading the U.S. to stock up on uranium. Also, Russia’s dominance in the uranium sector has undermined the United States’ global authority, making its domestic industry unsustainable. To preserve the nation’s leadership in the nuclear industry amid rising security concerns, the U.S. House of Representatives passed the bipartisan bill on December 4, which will facilitate an increase the nation’s uranium supplies by mining within the country or importation from trusted allies.

While a Biden administration might mitigate the need to stock up uranium deposits for defense purposes because the President-elect is expected to forge amicable trade deals with Russia and China, increased production of uranium is deemed useful for clean electricity generation. Carbon free large scale nuclear energy generation using domestically mined resources aligns well with the President-elect’s goal of ‘Zero emission by 2050’. Uranium mining and refining companies such as Cameco Corporation (CCJ) and Energy Fuels, Inc. (UUUU) operating in and around the United States have seen double-digit gains following the approval of the bill in the Senate. With this, their earnings capacity can be expected to grow significantly for a prolonged period. So, we think these two stocks should keep soaring.

Cameco Corporation (CCJ)

CCJ explores, refines, and sells uranium products through two segments – Uranium and Fuel Services. It primarily mines Cigar Lake Property in Canada for uranium deposits which it sells across the Americas, Europe, and Asia. It is one of the largest uranium producers in the world, accounting for 9% of the global uranium production in 2019.

On October 21st, CCJ raised $400 million through a private placement of debentures. The company plans to redeem previously issued debentures with the proceeds, thereby significantly reducing its interest burden.

CCJ’s revenue has increased 25% year-over-year to $379 million in the third quarter ended September 2020. This can be attributed to the higher average selling price of uranium, as well as higher sales volume. Gross profit from the ‘Fuel Services’ segment has risen 200% from the year-ago value to $200 million. The company has maintained a strong liquidity position with $1 billion in undrawn credit facilities.

Analysts expect CCJ’s EPS to rise 83.3% in the current quarter, 50% in the current year, and 144.4% next year. Moreover, its EPS is expected to rise at a rate of 9.8% per annum over the next five years.

CCJ has gained more than 155% to hit its 52-week high of $13.52 in December since hitting its 52-week low of $5.30 in March. The stock has gained 30.7% to date since the Senate approved the bill on December 4. How does CCJ stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

B for Peer Grade

A for Industry Rank

A for Overall POWR Rating.

The stock is also ranked #9 of 33 stocks in the Industrial – Metals industry.

Energy Fuels, Inc. (UUUU)

UUUU owns and operates multiple mines across the United States and Mexico for exploration and mining of uranium deposits. It operates through two segments – ISR Uranium and Conventional Uranium. The company is the primary supplier of uranium for various nuclear projects in the United States, with a licensed production capacity of more than 11 million pounds.

UUUU produced its first rare earth element REE on November 3, which has extensive applications in the nuclear fuel industry. A milestone in the U.S. rare earth industry, this pilot step was taken in tune with the country’s goal to reestablish itself as a self-sufficient REE manufacturer. The company partnered with National Energy Technology Laboratory in October to commercially develop mixed rare earth oxides.

UUUU’s revenues increased 14.9% year-over-year to $486,000 in the third quarter ended September30, 2020. Its cash and cash equivalents balance increased 107.5% from the year-ago value to $26.58 million. The company had zero debt as of October 6^th, which is impressive in the mining industry. It has significant cash reserves and working capital inflows to fund its daily operations, with no strain from periodic interest payments.

The consensus EPS estimate for the next quarter (ending March 31, 2021) indicates a 20% rise year-over-year. Furthermore, analysts expect the UUUU’s EPS to rise 19.2% next year. The consensus revenue estimate of $6.23 million for the next year indicates a 244.2% rise from the same period last year.

UUUU has gained more than 290% since hitting its 52-week low of $0.78 in March. Moreover, the stock has gained 29.2% since the Senate bill approval on December 4^th, hitting its 52-week high of $3.10 on December 12^th.

It is no surprise that UUUU is rated “Strong Buy” in our POWR Ratings system, with an “A” for Trade Grade, Buy & Hold Grade, Peer Grade and Industry Rank. It is currently ranked #15 in the same industry.

Want More Great Investing Ideas?

9 “MUST OWN” Growth Stocks for 2021

Are Stocks Stuck @ 3,700

Top 12 Stocks for 2021

CCJ shares were trading at $13.73 per share on Monday morning, up $0.40 (+3.00%). Year-to-date, CCJ has gained 55.19%, versus a 15.87% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

More Resources for the Stocks in this Article