Why ASX uranium shares could run even hotter in 2021

These ASX uranium shares have posted massive gains over the past year, with strong runs into 2021. But they could be just getting started.

| More on:
ASX uranium shares represented by yellow barrels of uranium

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There's no arguing with the numbers.

The past year (and then some) has seen the leading ASX uranium shares truly light up.

The Paladin Energy Ltd (ASX: PDN) share price, for example, is up 415% over the past 12 months. ASX uranium miner Deep Yellow Ltd (ASX: DYL)'s share price is up 246% over that same time.

Things have continued apace in 2021, with Deep Yellow shares up 24% in the calendar year and Paladin shares up 54%.

That more than handily outpaces the one-year 7% gains posted by the broader All Ordinaries Index (ASX: XAO), not to mention the 0.4% loss on the All Ords so far in 2021.

But the run higher for ASX uranium shares like these could only just be getting started.

Why ASX uranium shares may have a bright future

Australia may not opt to use uranium for its own power sources. Though Australia – both fortuitously and somewhat ironically – has among the world's largest accessible uranium deposits buried beneath its soil.

And demand for uranium in other parts of the world is picking up as the globe attempts to wean itself away from carbon-based fuels. This is an increasingly important focus for environmental, social and governance (ESG) investments.

As Bloomberg reports, "Uranium producers are reaping rewards from the flood of money pouring into electrification and environmental, social and governance investing themes". That's seeing demand begin to outpace supply for the first time in a decade.

According to GJL Research analyst Gordon Johnson, "Uranium sector supply/demand balance is the tightest we've seen since pre-Fukushima." Fukushima was the site of the post earthquake nuclear meltdown in Japan in 2011.

Pointing to the rising importance of ESG, Johnson says:

When you add to this, uranium stocks are now gaining attention from ESG investors due to their low GHG [greenhouse gas emissions] footprint and quintessential role as a clean energy alternative, we see the set-up for incremental/new Uranium investments as opportune.

Johnson said another potential tailwind for uranium shares is that institutional funds may be looking to increase their exposure to the sector. "If true, this could go on for a long time as they build significant positions ahead of the inevitable price rise in the commodity."

Today's share price moves

Both Paladin and Deep Yellow shares are selling off today. While the All Ords is down 1.1% in late afternoon trading, the Paladin share price has fallen 4.1% and the Deep Yellow share price is down 7% at the time of writing.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »