Tuesday, August 31, 2010

Cameco (NYSE:CCJ), Denison (AMEX:DNN), USEC (NYSE:USU) to Soar with Rising Uranium Demand

There are few industries that can be so easily seen as profitable in the long term, but uranium is one of them and companies like Cameco (NYSE:CCJ), Denison (AMEX:DNN) and USEC (NYSE:USU) are sure to soar over the long term as nuclear power is expected to surge over the next decade, with huge demand and diminishing supply.

Add to that Russia's decision to no longer downblend its weapons grade uranium, starting in 2012, and that will create up to a 20 million pound shortage in a global supply situation that is shrinking.

In about a 10-year period, shortage could reach as high as 100 million pounds, guaranteeing a huge increase in price as demand far outstrips supply.

For the short term, the story is different, as supply is ample, while some companies have dropped orders that had been counted on.

Over the next two or three years expectations are uranium shortages will already begin, and expand from there.

One other short term element to watch, is how China views the situation. In the past if they feel prices will skyrocket for a commodity, they have bought huge amounts and stockpiled it.

With energy being one of their major challenges, they could begin to do this in advance of price increases in order to secure their needed supply for the future; or at least for many years ahead.

If they go that route, prices could go up sooner than expected. If not, the patient, long-term investor will ultimately get a huge pay out from this sector.

It's only a matter of when, not if.

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