With the current war in Ukraine, a potential conflict in Taiwan, and rising uranium prices, these top nuclear energy stocks could be a good addition to your portfolio.
Indeed, uranium prices have almost doubled in the last two years, going from $31 a pound to $53 a pound. While down from the high of $64 per pound in August 2022, this commodity has room to grow.
Aside from higher uranium prices, the Stockholm International Peace Research (SIPRI) said last year that all nine nuclear-armed countries were increasing or upgrading their arsenals, leading to even more demand for top nuclear energy stocks.
Energy Fuels (UUUU)
Energy Fuels (NYSEMKT:UUUU) mines uranium and sells concentrates to nuclear utilities for the production of carbon-free nuclear energy. Aside from uranium, it also produces vanadium, which is used to strengthen steel. Vanadium is very useful for strengthening armor plates, axles, tools, piston rods and crankshafts.
Energy Fuels is one of the best nuclear energy stocks to buy, especially since it has an extremely high net profit margin of 236.87%. Besides being a profitable company, it also has no debt, a solid return on equity of 22% and a return on assets of 21%. Simply put, this company knows how to properly manage its finances, provide solid returns to its investors, and grow sustainably despite a volatile industry.
The company also grew its net income from -$27 million to $69 million over the last three years. Unlike other growth stocks, it’s relatively undervalued as it has low price-to-earnings (P/E) and price-to-book (P/B) ratios of 14.58% and 34%, respectively.
Cameco (NYSE:CCJ) is one of the world’s largest uranium producers. One of the biggest reasons behind its large output is that it’s near the flagship McArthur River mine in Saskatchewan, Canada, the largest uranium mine in the world. Besides mining uranium, this company also operates uranium conversion and fabrication facilities.
It’s a profitable company since its net margin is 7.79%. Besides being profitable, this is one of the more stable nuclear energy stocks, as it has a low debt-to-equity ratio of 0.17. Its high current ratio of 7.75% shows that it has significant short-term assets compared to liabilities and is very liquid.
By having high liquidity, this means that Cameco Corp can easily manage its short-term obligations, which makes it a less risky investment. Lastly, its net income has grown from -$53.17 million to $168 million over the last three years. This shows that it’s not only a stable company but one that has room to grow.
Uranium Energy (UEC)
Uranium Energy (NYSEMKT:UEC), another top nuclear stock to buy, has exposure to various uranium mining and related activities, including exploration, pre-extraction, extraction and processing on uranium projects. It currently operates throughout the U.S. and Paraguay. The company also has exposure to the highest-grade and largest undeveloped Ferro-Titanium deposits in the world, found in Paraguay. Ferro-Titanium is used to create and strengthen both steel and stainless steel.
Like Energy Fuels, the company has no debt, which is one of the main reasons why it made this list of top nuclear stocks to buy. This stock is very liquid. It has a 4.5% current ratio and a high interest coverage ratio of 24.91%. This means that it’s extremely solvent.
It also doesn’t hedge its uranium production, meaning it can take full advantage of rising uranium prices. Hedging refers to when companies take equal but opposite positions in the cash and futures market. So, a soybean company could hedge by shorting futures contracts on soybeans, providing downside protection if soybeans fall in price.
On the date of publication, Dalton Brewster did not have (either directly or indirectly) and positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.