Investors who bought ASX uranium shares at the start of 2023 will be sitting on some seriously outsized gains today.
That's come as renewed global interest and investments in emissions-free nuclear power have seen the demand growth for uranium outpace supply growth. And that's seen uranium prices top 15-year highs, gaining more than 50% in 2023 to US$86 per pound.
As you'd expect, this has helped boost the revenue and profit outlook for Australia's leading uranium stocks. And it's sent their share prices soaring.
Here's how these five ASX uranium shares have performed since the opening bell on 3 January:
- Paladin Energy Ltd (ASX: PDN) shares are up 54.9%
- Bannerman Energy Ltd (ASX: BMN) shares are up 68.1%
- Deep Yellow Limited (ASX: DYL) shares are up 52.2%
- Boss Energy Ltd (ASX: BOE) shares are up 105.4%
- Alligator Energy Ltd (ASX: AGE) shares are up 42.5%
For some context, the All Ordinaries Index (ASX: XAO) has gained 7.6% year to date.
With those kinds of market-smashing gains already in the bag, can these stocks continue to outperform in 2024?
What next for ASX uranium shares?
Regardless of the strong share price gains in 2023, ASX uranium shares could continue to outpace the market in 2024.
The likely ongoing demand growth for the uranium they mine was highlighted at the 28th United Nations Climate Change Conference, or COP28, in Dubai.
The conference saw 22 nations, including the United States, Japan and France, agree to triple their nuclear power supplies by 2050. That should please the International Energy Agency (IEA), which says that the world's nuclear capacity will need to double by 2050 to meet climate goals.
China and India currently have the most new nuclear plants under construction.
And with Geoscience Australia reporting that Australia has the world's largest Economic Demonstrated Resources (EDR) of uranium, ASX uranium shares are well positioned to profit from any ongoing demand growth.
Indeed, this morning Alligator Energy reported intersecting uranium mineralisation during its maiden reverse circulation (RC) drilling program at its Nabarlek North Project, located in the Northern Territory.
What are the experts saying?
A number of prominent analysts and fund managers are bullish on the outlook for uranium demand and by connection ASX uranium shares.
"When you look over the longer term, there is a severe supply-demand imbalance that we see developing," Steven Schoffstall, director of ETF product management at Sprott Asset Management said in November.
Schoffstall added:
If you go out to 2040 or so, you see about a cumulative 1.5-billion-pound shortfall in the supply of uranium. So, we think over the longer term, that's going to be conducive to much higher prices in uranium.
Guy Keller, a portfolio manager at Tribeca, points to the massive expected demand growth from China as likely to keep uranium prices elevated, helping support further outperformance from ASX uranium shares.
"This was an extraordinary COP28 for nuclear. China wants to go from 30 million pounds a year of consumption to 150 million in just 15 years," Keller said (quoted by The Australian Financial Review).
According to Keller:
When China makes a structural change to embrace a raw material it's short of domestically, it creates a multi-decade demand for that raw material.
And he expects the uranium demand and supply imbalance will persist until ASX uranium shares and uranium producers worldwide ramp up their exploration and development activities.
"There's no obvious supply coming, and we've had more than a decade of underinvestment in exploration and development of uranium," Keller said.
