vested
Manic Focus on GrowthFor the past two years, the outlook for the uranium market has “gone nuclear.”
In 2016 alone, uranium prices surged higher – breaking the $23-per-pound price level – while long-term prices have edged past $33 per pound.
Plus, it’s a verifiable fact that the global nuclear-power business continues to grow.
In 2016, the world’s fleet of nuke plants went from 439 to 446.
According to Cameco, that number will increase to 456 in 2017.
And it’s only set to go up from there, with 60 reactors under construction around the world.
The International Atomic Energy Agency’s (IAEA) most realistic estimate is that 90 new nuclear plants will enter service around the world by 2030.
The growth story for nuclear power, much like the growth story for oil and natural gas demand, is centered in the emerging markets. Since the 1980s, global electricity consumption has tripled and is expected to more than double again over the next two decades.
And as those reactors come online, they will require the uranium that Cameco mines, which should finally lead to the reduction of the current supply glut and push uranium prices higher.
As the revival of nuclear power ramps up and demand for uranium kicks into gear, Cameco will be a key beneficiary.
But let’s say, for some reason, those nuclear power plants never come online – which is highly unlikely, mind you.
Cameco still has the fortitude to stick around and deliver profits to its investors.
You see, Cameco does business a little differently than its rivals. Its business is built on long-term contracts.
Speculation aside, Cameco holds the leading net order for uranium among miners with a
backlog of contracts worth more than $46 billion.For its long-term uranium contracts, Cameco has nearly 200 million pounds of uranium orders on its books through 2019.
That’s more than six times the amount of uranium it sold in 2015.
By that point, new construction of nuclear power plants should push demand beyond supply and, with any luck, lead to higher uranium prices.
The Bottom Line: Cameco is big and well-run enough to easily survive today’s market because of its contract-focused business. Most of the other companies selling uranium today don’t have the same scale it has.
Source: 10 Minute Millionaire
https://10minutemillionaire.com/2017/05 ... /#deeplink
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