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Last year I interviewed several thought leaders about uranium, and I have to say that I’m a fan from a long-term perspective as the quest for cleaner fuel alternatives intensifies. A single uranium pellet outperforms traditional energy sources in electricity generation. We simply can’t move toward a green future without uranium.

Now of course, I don’t recommend holding physical uranium in your basement. Might be a bit of a hazard honestly.

But what about holding uranium companies as true investments? There are several great companies out there, and the macroeconomic tailwind should push the entire industry higher over time. Nations are grappling with the need to reduce carbon emissions and navigate the energy crisis exacerbated by geopolitical tensions. The operational landscape of nuclear reactors is expanding, with 438 reactors currently active and 58 under construction. This growth is predominantly led by countries like China and India, reflecting a significant pivot toward nuclear energy in the global energy mix.

Supply-side bottlenecks, however, such as the time required to restart idled mines and access to essential materials, present challenges. These factors, along with geopolitical considerations, have pushed uranium prices higher, with them nearly doubling over the past year and rendering previously unprofitable mines viable once again.

Market analysts forecast an average supply deficit of 35 million pounds per year over the next decade due to the lengthy lead time for new mines, which can be up to 15 years. When you combine this with the demand for uranium, it’s a powerful story. The World Nuclear Association estimates that uranium demand will rise from 65,650 metric tons in 2023 to nearly 130,000 metric tons by 2040.

Cameco Set to Shine in a Uranium Bull Market

Cameco Corporation (NYSE:CCJ) is the biggest player here currently. You can tell that by looking at popular uranium mining ETFs like Global X Uranium ETF (NYSEARCA:URA) where CCJ makes up over 21% of the fund. The company has a market capitalization of $18.13 billion, and I think there’s a lot of room to grow. Why? Because frankly I don’t see any way to live in the AI future without a ton more electricity, which uranium can supply, and which Cameco would benefit from in terms of demand.

Cameco’s strategic positioning in the uranium sector is robust and undeniable. The company’s extensive mineral reserves and diversified supply sources, alongside its significant role in the nuclear fuel cycle, underscore its potential as a strategic investment in the face of increasing populations, electrification, decarbonization, and geopolitical uncertainty.

The compound effects of a global shift toward sustainable energy, augmented by geopolitical dynamics and the challenging supply-demand equation, set the stage for a promising future for uranium investments. Cameco long term has the potential to be uranium’s equivalent of Exxon Mobil (NYSE:XOM), and while the stock has done well, it still looks to me like a compelling long-term allocation. It may not be Nvidia (NASDAQ:NVDA), but it sure is needed to power all those Nvidia chips over time.

On the date of publication, Michael Gayed did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.

Michael A. Gayed is the Publisher of The Lead-Lag Report, and Portfolio Manager at Tidal Financial Group, an investment management company specializing in ETF-focused research, investment strategies and services designed for financial advisors, RIAs, family offices and investment managers.

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