Down 33% over the past six months, the S&P/ASX 200 Index (ASX: XJO) uranium stock Boss Energy Ltd (ASX: BOE) looks to be trading at bargain basement prices.
That's according to Todd Warren, a partner on Tribeca's global natural resources team (courtesy of The Australian Financial Review)
Here's why Warren is bullish on the outlook for this beaten-down ASX 200 uranium stock.
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Why this ASX 200 uranium stock could be in for a strong comeback
Warren pointed to elevated interest rates over the past three years as weakening market sentiment towards decarbonisation and electrification.
However, he said that despite concerns that higher rates are undermining the economics of the energy transition, "The reality is that the energy transition is moving ahead at pace."
Adding potential fuel to a rebound in ASX 200 uranium stocks, despite interest rates beginning to come down in most top economies (with the RBA still likely eyeing 2025 to begin easing), Warren noted that, "This is no longer a crowded corner of the market and return prospects have improved markedly."
This brings us back to Boss Energy, the stock Warren named as the most undervalued by the market in his fund.
"We are bullish on uranium. We have also been bullish on copper for some time now, but the immediate upside in uranium looks very attractive," he said.
According to Warren (quoted by The AFR):
We like Boss Energy, the Australian-listed uranium producer. Increasingly, we are seeing governments and corporates recognise the benefits of nuclear power at a time when power demand is increasing for the first time in decades.
The meteoric rise of artificial intelligence and data consumption significantly raises emissions as the carbon footprint of hyperscalers shows you. It's why companies such as Amazon, Oracle and Google have all signed deals to source nuclear power for their data centres.
Indeed, just last month Amazon.com Inc (NASDAQ: AMZN) reported that its Amazon Web Services business is investing more than US$500 million in nuclear power to establish reliable baseload power for AI-enabled data centres.
The cloud computing company intends to construct three small modular nuclear reactors in the United States.
And ASX 200 uranium stock Boss Energy is well-placed to capitalise on the nuclear resurgence.
"Boss Energy is now one of a small handful of uranium producers globally that are ramping up operations in the Tier 1 jurisdictions of Australia and the US," Warren said.
Indeed, in its most recent production update on 25 October, Boss Energy reported that the production ramp-up at its 30% owned Alta Mesa Uranium Project in the US state of Texas had passed another important milestone, with the first of three ion exchange plants nearing flow capacity.
In its Australian operations, Boss produced its first drum of uranium at its South Australia Honeymoon project in April. In July and August, the company produced 72,516 pounds of uranium.
Citing two more reasons to be bullish on this beaten-down ASX 200 uranium stock, Warren added:
It is very well funded and, because of the pullback this year, is trading at a discount to net asset value which is, bizarrely, almost in line with unfunded higher-risk explorers and developers.
It is also one of the most shorted names on the ASX, so there is also a chance of a short squeeze.
