Market Musings 240623:

Five investment themes to ponder

What themes I am considering or investing in at present

This week’s podcast

Dax-cellent returns: exploring the recent highs in the German DAX index

What stocks have led the DAX back to this new multi-year high over the last 9 months?
Can this bullish trend be maintained on the DAX, in spite of a technical recession in Germany?
How is it then that the European Autos sector has returned close to its highest levels since early 2022?
The positive catalysts that we could see for the DAX moving forwards
Is the bad economic news already integrated into the DAX, despite the rally back to year highs?

Summary: Top ideas

Energy transition and nuclear energy: Uranium
Risk of deflation - Retail stocks could benefit
Grey pound power - transmission of housing wealth. Obesity
Recycling - circular economy.
Rise of Value-for-money retail, bundled services

Five of my favourite investment themes where I am currently invested are listed below:

1. Energy transition and the need for greater nuclear electricity generation in the short to medium term as a solution

Uranium is the fuel of choice, given that China and India continue to add new nuclear power plants to serve their greater energy needs, while Japan is restarting nuclear power plants idled after the Fukushima incident in 2011.

Europe is also maintaining the current nuclear generation fleets (with the exception of Germany), as a key plank in its energy security policy of reducing reliance on natural gas for electricity generation.

Moreover, the growth in electric vehicle take-up will put more pressure on the current electricity grid, requiring more reliable baseload electricity generation which cannot be provided by solar and wind power.

Pressure continues to build for US and other utility companies with nuclear power plants to enter into new contracts to buy uranium, which is slowly pushing the price of the yellow cake higher.

Long-Term Uranium price - rising steadily, but far from previous peak

qM27vjX0fvJ5yJct6mfLb2iW67_wrI2rRQSLlbjmLQiMMbD1nrNM0rJEfGl4VjEcRV9_8QqDFCByfSWE7JYCBQPw7xxMDA0GomU1p8m28WB14mEGPKhGNjv1cx3bfpwBpkZw6kfF6jUV2PtNk--3dr0

Source: Cameco

The easiest way to invest in a rising uranium price over time is through YCA Yellow Cake, a listed fund which buys and stockpiles uranium.

2. As the…

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Northender

25th Jun '23

Thank you once again for your musings, Edmund. Although I don't usually look too closely at "macro" , I always find your take on things very interesting.

bsharman

26th Jun '23

Thanks Edmund. I'm also a long-term believer in the uranium bull case. Supply is very limited and demand is increasing year on year - with the likes of China and India having ambitious plans for the number of reactors they are building over the next few years. The Uranium price will have to rise to incentivise new production. There is also a bifacation of the market in that the world's biggest producer is based in Kazakhstan and the East - China, Russia will absorb all of that supply, leaving the west looking for alternatives. Also, there is a bill going through the system in the US to ban imports of Russian uranium (and by extension Kazakhstan as they are basically controlled by the Russians). Fuel buyers have to enter the market in this limited supply environment and therefore the market will have to adjust the price upwards. The price of Uranium has risen quite a bit already, but the Uranium miners, explorers and producers are still languishing. Perhaps an opportunity? I hold Geiger Counter (LON:GCL) and Sprott Uranium Miners UCITS ETF Acc (LON:URNP)

Epitychia

Yellow Cake (LON:YCA) looks cheap, the other main point is that it is a diversifier. It does not move in lockstep with most other firms because it is very little affected by the economic cycle.

Market Musings 240623: Five investment themes to ponder

Market Musings 240623:

Five investment themes to ponder

This week’s podcast

Dax-cellent returns: exploring the recent highs in the German DAX index

Summary: Top ideas

1. Energy transition and the need for greater nuclear electricity generation in the short to medium term as a solution

2. As the…

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About the Author

Edmund Shing

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