Quantifying the Sweet Spot for Uranium Stocks

Uranium stocks have begun their bananas phase of upward ascent.

Today we quantitatively highlight a subset of uranium stocks that we believe are juiced to take performance leadership in the sector.

In this note we’re not going to re-invent the uranium / nuclear bull thesis, there are many great analysts that have done a superb job on this front including our good friends Doomberg, Kuppy and Goehring & Rozencwajg.

Nuclear is the ultimate energy endgame and we’re in the midst of a uranium supply squeeze; a backdrop where uranium miners thrive.

What Does History Say the Right Investing Strategy is in Uranium?

We quantitatively examined the last epic uranium bull run (2003-2007) for insights on what worked in the “bananas phase” - the results were fascinating.

Cameco is THE bellwether for uranium stocks, the gorilla in the nuclear reactor - uranium stocks orbit around the name.

During the last bull run Cameco rose 800%; small caps (which we define as the bottom 50th percentile of the uranium stock universe) lagged Cameco initially but then went parabolic - returning 1,187%.

In the current bull run (March 2020 to today) we’re seeing a similar dynamic play out. Cameco has rallied 550%, while small caps (bottom 50th percentile) are only up 180%.

In the last bull run the maximum underperformance of small caps vs. Cameco was -300%; small caps in the current bull market are underperforming by -270% - we’re firmly in the inflection zone for small caps to rip.

We further analyzed the historical data and found a sub-set of the uranium universe that was supercharged - returning a whopping 2,775% over the last bull run, outperforming Cameco by 2,000% and small caps by 1,600%.

This subset of small cap uranium stocks are driven by institutional money managers hunting for value in the sector. It’s the classic setup of too much capital chasing few desirable assets. The outcome is parabolic share prices.

In our report we highlight a group of 10 uranium stocks that fit the criteria for supercharged returns, utilizing 4 key fundamental screens to identify which stocks will be poised to be bid up by institutional money.

Let’s dig in…