Uranium: An Attractive Relative Value Setup + The Optionality of M&A

5 Stocks to Have on Your Radar

In the face of AI and technology stocks rallying on a daily basis, uranium feels like the forgotten stepchild of growth.

However, we believe we’re currently at an extreme with respect to negative sentiment for the uranium sector, which presents an exciting opportunity for sizable returns over the coming months.

Uranium and technology stocks have an uncorrelated upward price channel: over the last year it’s been a great channel trade to own uranium stocks over technology stocks when the relative price ratio is at the lower bound (bottom component of the graph). We’re sitting at that lower bound right now.

Historically we’ve seen swift returns for uranium stocks at these relative price levels: +28% in August, 2023 & +23% in March, 2024.

This presents a great setup for growth portfolio managers looking to find undervalued opportunities; we believe that uranium stocks are the one area of the market that will demand their focus.

Paladin’s announcement of the acquisition of Fission Uranium for C$1.14 billion is the M&A catalyst that we believe will trigger a value re-rating of uranium stocks vs. technology.

While some investors may bemoan the takeout price of Fission Uranium given the upside ahead in the sector; what M&A does is set a valuation line in the sand that provides a level of certainty for new investors to begin to research and invest in the sector.

M&A benefits small & microcap stocks disproportionately; we highlight five potential uranium takeout ideas in the sector.