The Top Canadian Uranium Stocks to Buy in November 2024
Canada holds an **abundance of resources**, making it no shocker that the Toronto Stock Exchange is packed with **cyclical companies** such as those dealing with oil, gold, and uranium.
In this article, we will focus on the uranium end of things, including why the world is bullish on uranium, what it’s used for, and why some of the top uranium stocks to buy today are located in Canada.
The best uranium stocks to buy right now
- Fission Uranium (TSE:FCU)
- NextGen Energy (TSE:NXE)
- Sprott Physical Uranium Trust (TSE:U.U)
- Cameco (TSE:CCO)
Fission Uranium (TSE:FCU)
Fission Uranium Corp (TSX:FCU) doesn’t just have a catchy name. The company is also poised to be a significant uranium producer.
The company owns a 100% interest in the advanced, high-grade, near-surface Triple R uranium deposit. This asset is near the Athabasca basin by the Alberta and Saskatchewan border.
The company is excited about its uranium assets because they’re located near other proven uranium reserves.
Initial testing has shown the location boasts plenty of high-grade minerals near the surface, which should accelerate construction time and keep extraction costs down once production starts.
This is very much a speculative investment. It is currently pre-revenue, and the latest update from management stated the company doesn’t expect to start production until 2029. You’ll need to be accustomed to share dilution and an extremely volatile share price as the company continues toward production on the PLS property.
The company’s Canadian production potential certainly puts it in a position to benefit from much higher quality reserves. It is likely why this company is trading at more than a $500M~ valuation before even generating a cent of revenue.
Its uranium project is expected to generate an internal rate of return of over 25%, highlighting the quality of the asset.
Fission Uranium is not for the faint of heart. With a beta of 3, this company will be highly volatile. Investors buying in now need to have a high-risk tolerance and long-term conviction in the demand for uranium and the success of the company’s primary asset.
NextGen Energy (TSE:NXE)
NextGen Energy (TSE:NXE) is another pre-revenue uranium exploration company. It acquires and explores for uranium properties in Canada. At the time of writing, the company’s portfolio consists of 3 key projects. Those are Rook I, Radio Property, and IsoEnergy, with the company currently focused on developing the Rook I project.
The company states it has slowly developed a highly concentrated uranium supply due to a 10-year bear market in the price of uranium.
It believes this bear market caused extreme underinvestment in the commodity, which will lead to higher prices.
Its Elite Arrow Project, located in Saskatchewan, is exposed to one of the best mining jurisdictions in the world, is expected to have a 24-year operating life, and has some of the lowest expected costs in the world.
Its Rook I project is the largest development-stage uranium deposit in the world at the time of writing. It has an expected mine life of just shy of 11 years. The mine will produce just under 29 million pounds of uranium annually and expected after-tax cash flows are predicted to come in at around $930M.
Considering the company has a market cap of about $3.5B, $930M of cash flow from a single asset is undoubtedly attractive. If the asset can reach 28-30M pounds a year in production, it could represent 15-20% of the global output.
The only issue with NextGen right now is that, much like Fission, it is a highly speculative investment. You’re paying a $3.5B valuation for a company that is not expected to generate revenue over the next few years.
Share dilution has been an issue, with shares outstanding going from 140M in 2014 to 487M in 2023. You’re going to need to be very patient with this company moving forward.
The company holds some solid assets, but investment now is a hope those assets will be fruitful. Nothing is ever guaranteed, especially with volatile mining companies. So not only do you need to have an appropriate risk tolerance for investing in a company like this, but patience as well.
Sprott Physical Uranium Trust (TSE:U.U)
The Sprott Physical Uranium Trust (TSE:U.U) is a unique way to invest in uranium, brought to you by Sprott Asset Management.
Unlike the other stocks on this list, which can have operations that range from uranium mining, exploration, or sales, Sprott invests in uranium-based assets like uranium oxide and hexafluoride.
This is an investment fund and is the first-ever uranium trust.
At the time of writing, it holds over 61 million pounds of uranium with a market value that exceeds $3.5B.
Sprott is a mainstay and what I consider a blue chip in the commodity space, having several successful funds like this.
Suppose you’re looking to buy Sprott’s uranium trust. In that case, you want direct exposure to price fluctuations in uranium. A fund like this will not be saddled with exploration, development, mining, or marketing and sales costs. It simply holds the underlying commodity, and its main objective is to benefit from its increase.
There’s not much more to say about it than I already have. It’s relatively sim
Cameco (TSE:CCO)
Cameco Corporation (TSX:CCO) is a behemoth in the uranium business. It’s the world’s largest publicly traded uranium producer and extracts nearly 20% of the world’s annual mineral supply. The company has over 450 million pounds of uranium reserves, ensuring it’ll be a big player for years.
Major assets include ownership stakes in Cigar Lake, McArthur River, and Key Lake uranium mines in Saskatchewan. It also owns a stake in Inkai, a uranium mine with low extraction costs located in Kazakhstan.
McArthur River and Key Lake combine to form the world’s largest high-grade uranium mine/mill.
All these mines are actively producing today, and Cameco also buys product from other producers and resells it to customers.
After weak uranium prices forced the company to shut down its McArthur River operation in northern Saskatchewan, in 2022 it announced the mine would be reopened.
It initially told investors the facility would produce some 15 million pounds per year, but 2023’s numbers were only expected to hit 10.5 million pounds. Production should increase in 2024, with the company projecting McArthur River will produce 12.6 million pounds of high-grade uranium.
Cameco is far from cheap. In light of rising uranium prices, valuations have shot up extensively. At the time of writing, the company is trading at more than 33x 2024’s expected earnings.
However, considering the company is expected to post triple-digit earnings and EBITDA growth over the next few years, investors are more than willing to fork over the premium.
If you’re looking for a blue-chip uranium producer, Cameco fits the bill. However, it’s essential to understand that although Cameco would be considered a “blue chip” in the uranium sector, it is far from stable. We can expect the company to be very volatile, especially if uranium prices fluctuate extensively.
And, if the company fails to hit lofty estimates of triple-digit bottom line growth placed on it by analysts, earnings multiples could likely be rerated downwards. Cameco is the least risky out of the bunch on this list but is far from without risk. Don’t get the two mixed up.
The bottom line on uranium stocks
It’ll take a significant increase in nuclear power for these uranium stocks to be a good investment.
Fortunately, it sure looks like that’s coming. However, there will still be plenty of controversial reports and environmentalists who think the path to a greener future doesn’t go through nuclear energy.
But the case can be made. It is a perfect transition away from fossil fuels on the path to zero-carbon energy sources. If that plan is implemented, the demand for uranium miners and the refinement, manufacturing, selling, and drilling for uranium will undoubtedly increase.
Just understand that these investments are not for the defensive investor. A company like Cameco is cash flow positive but is far from reliable. And speculative investments like the pre-revenue exploration and mining companies on this list are ones you really need to figure out if they fit within your risk tolerance.
How big of a uranium player is Canada?
Currently, Canada is the second-largest uranium producer globally, accounting for around 13% of total global output. It also has the world’s largest deposits of high-grade uranium. The quality of its uranium deposits is 100x greater than the world average.
Remember that it’s important to note we’re talking about high-grade deposits, not total deposits. For that, Canada comes third, behind countries like Australia and Kazakhstan.
With Canada being one of the biggest producers, you’d think it’s a very popular commodity. However, the industry is much smaller than you’d think.
The Government of Canada states that the mining and milling of uranium is only an $800M a year industry, employing just over 2000 Canadians.
Compare this to the oil and gas industry, which employs over 80,000 Canadians. You can see that although Canada is one of the global leaders in uranium production and uranium exploration, it is still a relatively small industry. Why?
The slow adoption of nuclear power weighs on uranium stocks, but maybe not for long
Uranium is primarily used to generate nuclear power. Nuclear power over the years has faced some harsh criticism from environmentalists and the like, and for a good reason.
The Fukushima nuclear power plant incident in 2011, the most severe nuclear accident since Chernobyl, soured nuclear power generation for many countries.
Many countries put nuclear reactors and power plants on standby after the incident. They’re still not up and running today. However, it is regaining its footing in recent times.
Even though Canada is one of the largest uranium producers and has the world’s largest deposits, over 85% of our uranium is exported. We utilize very little nuclear power here, as it accounts for only 15% of our total electricity generation.
This would be the opposite strategy of a country like Argentina that produces no uranium, importing all of its demand.
The central thesis for uranium and nuclear power, in general, is to provide a stepping stone from fossil fuels to renewable energy. Many don’t believe an immediate switch is possible. With nuclear power having a relatively low carbon footprint, this makes sense.
The bullish case for Canadian uranium stocks
There is one main reason investors looking to buy stocks should be bullish on Canadian uranium companies. That is nuclear power’s massive potential.
As mentioned above, nuclear is a green energy that doesn’t get nearly the attention of other environmentally friendly energy solutions. Yes, nuclear plants are expensive to build in the first place. Still, once the asset is in place, it’s an incredibly efficient way to produce energy for decades.
However, there are also two main downfalls to nuclear energy. The first we went over above is a risk of a meltdown. However, this is something that increases in technology have minimized over the years. Nuclear energy is not 100% safe, but it’s pretty darn close.
The other downfall is nuclear waste, but today’s efficient reactors hardly generate any waste. Even with these downfalls – which have been improved significantly over the last couple of decades – nuclear is still a great power source that doesn’t get nearly the attention it deserves.
Is this a long-term solution to our energy woes? No, not necessarily. But, it certainly looks appealing in the short to mid-term as we transition away from dirtier forms of energy like coal.
Is there a uranium ETF?
Picking individual uranium stocks, especially pre-revenue ones and firmly in the exploration stages, poses significant risks.
You’ll likely face significant capital losses if you’re wrong about the horse you’ve bet on. So, many decide to invest in a uranium ETF to gain exposure to the entire uranium mining sector.
I tend to look at the Global X Uranium ETF, which trades under the ticker URA. There aren’t enough uranium producers here in Canada to warrant an ETF. So, we do have to head south of the border.
But just because this is a US-listed ETF doesn’t mean it doesn’t contain some of the best Canadian uranium stocks. It has most of the stocks listed below, including some additional ones like Denison Mines, Global Atomic Corp, and Energy Fuels. Feel free to check it out if you’d like.
But if you’re interested in picking individual uranium stocks, let’s move on to some of the top opportunities in Canada today. For the most part, we’ll organize this list from most to least speculative.