If you were to gauge the outlook of ASX uranium stocks by the past month's performance, you might be tempted to throw in the towel.
After enjoying some of the strongest share price gains among any group of companies, Australia's top uranium shares have all lost ground over the last four trading weeks.
The selling pressure has come amid a roughly 8% decline in uranium prices over the last month.
Four weeks ago, uranium was trading for US$93 a pound. Currently, the radioactive metal is fetching US$86 per pound, well down from the 16-year highs of US$106 per pound reached in early February this year.
Still, bear in mind that in 2023 uranium prices averaged just US$67 per pound in 2023. And back in 2021 the spot price for yellow cake averaged around only US$30 per pound.
Still, with the past month's retrace, investors have been quick to hit the sell button.
Here's how these five top ASX uranium stocks have performed since this time last month:
- Paladin Energy Ltd (ASX: PDN) shares are down 13.56%
- Bannerman Energy Ltd (ASX: BMN) shares are down 8.22%
- Deep Yellow Limited (ASX: DYL) shares are down 10.19%
- Boss Energy Ltd (ASX: BOE) shares are down 26.86%
- Alligator Energy Ltd (ASX: AGE) shares are down 8.33%
For some context, the All Ordinaries Index (ASX: XAO) is down 0.2% over this same period.
Despite that retrace, longer-term shareholders will still be sitting on some outsized gains.
Here's how these ASX uranium stocks have performed over the past 12 months, a period that's seen the All Ords return 8.5%.
- Paladin shares are up 99.30%
- Bannerman shares are up 142.17%
- Deep Yellow shares are up 86.54%
- Boss Energy shares are up 33.12%
- Alligator Energy shares are up 37.50%
That's more like it!
Now here's why I think these companies could continue to outperform.
Why ASX uranium stocks could outshine
The first reason I remain bullish on ASX uranium stocks is the rapidly changing global public opinion surrounding nuclear power.
Nuclear energy was all but off the table following the 2011 Fukushima disaster in Japan.
But with climate change at the top of many nations' agendas, we've seen a big turnaround in sentiment for the reliable, carbon-free baseload power offered by both the newer design modular and traditional large scale nuclear reactors. Though disposing of the radioactive waste remains an ongoing concern.
The second reason ASX uranium shares could charge higher once more is the massive forecast demand growth that's come along with this shift in public sentiment.
Currently, more than 60 nuclear power plants are under construction worldwide. Another 90 are in the planning stages, with hundreds more being considered.
China and India lead the charge in building new nuclear plants, but other nations are also doing so, including Japan, South Korea, Russia, and Brazil.
Indeed, it was only back in December that 22 nations at the COP28 climate conference – including Japan, the United States and France – pledged to triple their nuclear power capacity by 2050.
And the third reason ASX uranium stocks could continue to reward investors into 2025 and beyond is that there is very limited supply growth to meet that booming demand growth.
According to the World Nuclear Association, global demand is likely to outpace global supply through to 2040.
And over the medium term, a number of nations are turning their backs on Russia's uranium exports amid its ongoing invasion of Ukraine.
The US has gone so far as to ban Russian uranium imports, a ban that drew the attention of Boss Energy managing director Duncan Craib this week.
Craib said, "US President Joe Biden's recent signing of legislation to ban the importation of uranium products from Russia … was a game-changing event for the uranium market and in particular for uranium projects in North America and Australia."
And with Australia sitting on the world's largest proven uranium reserves, I reckon ASX uranium stocks are well-placed to capitalise on the ongoing supply and demand imbalances.
