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The 'X factor' lifting uranium stocks

Kitco News

Sprott's uranium trust is partly credited with lifting the metal, according to RBC Dominion Securities.

The bank published research yesterday noting the rise in uranium prices.

Bellwether Cameco is up 18% for the week to $21.39 a share. The company is also up 60% for the year.

Juniors and developers are up sharply, too. In the past five days Denison Mines is up 21%, Uranium Energy gained 22% and NexGen Energy has grown 27%.

"Renewed financial interest to invest in physical uranium, aided by the Sprott uranium trust, has recently pushed spot prices higher and is an x factor in our price forecast," wrote analysts from RBC, who published their note yesterday.

The Sprott Physical Uranium Trust was incepted in July. It invests and holds substantially all of its assets in uranium in the form of U3O8. Goals of the fund are to create a "liquid and convenient way to own physical uranium," according to Sprott.

RBC revised its rating on Cameco to sector perform from underperform.

"As an incumbent producer with idled capacity, we think Cameco's valuation may remain elevated due to strong investor sentiment. We maintain our Sector Perform rating on NexGen and raise our PT to $7 from $6. As a developer of the best undeveloped uranium asset, we see NexGen as having significant leverage to the long-term uranium market recovery, although shares are nearly fairly valued."

Uranium Energy CEO Amir Adnani said in an interview that the Sprott fund is helping. He also credited a swing in sentiment.

"The sector was just hated...but because we are seeing so much concern placed on decarbonization...we are seeing a serious embrace of nuclear power and a sentiment shift," said Adnani in an interview with Wall Street Unplugged podcast published mid-week.

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