Uranium stocks find spotlight with Trump's nuclear comments
23/12/2016 21:56
By Lewis Krauskopf
NEW YORK, Dec 23 (Reuters) - Donald Trump's call for an
expansion of the United States' nuclear capabilities has shone a
spotlight on a group of uranium stocks that has been battered
over the past six years but have seen some new life since his
presidential election victory.
A clutch of uranium companies including Uranium Energy Corp
UEC.A and Ur-Energy Inc URG.A trade at around $1 a share or
even less and have market values of less than $400 million.
Canada's Cameco CCO.TO CCJ.N , one of the world's largest
producers, is an exception in North America, with market value
above $5 billion.
Since the Nov. 8 election, U.S.-traded uranium shares are up
between 15 percent and 30 percent, against a 14.8 percent rise
for the Russell 2000 small-cap index .RUT . During the
presidential campaign, Trump said the U.S. nuclear arsenal
should be modernized and suggested Japan and South Korea could
acquire nuclear weapons. urn:newsml:reuters.com:*:nL2N17U0G0 urn:newsml:reuters.com:*:nL8N1DM3M1
Some stocks have seen swings since Trump on Thursday tweeted
that the U.S. "must greatly strengthen and expand its nuclear
capability until such time as the world comes to its senses
regarding nukes." urn:newsml:reuters.com:*:nL1N1EH1J5
Shares of Uranium Energy climbed for two straight days,
while Uranium Resources Inc URRE.O stock was little changed on
Friday after rising 31 percent on Thursday in its two heaviest
trading days since August. Still that brings Uranium Resources
up to only $1.41 per share, resulting in a market value of $19
million.
Trump's comments "could mean a really big thing for uranium
equities, however we really do need to see a sense of scale of
what he is thinking," said Rob Chang, head of metals and mining
research in Canada for Cantor Fitzgerald.
"If there is a notable increase in demand from the weapons
standpoint, that could certainly be a huge boost," said Chang,
who thinks uranium prices regardless are due to rise off of
decade lows because of impending demand from utilities.
Trump on Friday sowed more doubt about his position on
nuclear proliferation, reportedly welcoming an arms race even as
his spokesman insisted an atomic weapons build-up was not likely
to happen. urn:newsml:reuters.com:*:nL1N1EI0G9
Chang said sentiment for the stocks has been helped by
Trump's pro-nuclear comments, as well as Trump's nomination of
Oklahoma Attorney General Scott Pruitt, a critic of federal
environmental regulation, to head the Environmental Protection
Agency, suggesting federal opposition to some mining projects
may be relaxed.
"So it's positive for all of mining, and uranium, in my
opinion, is the most heavily regulated of all," Chang said.
Uranium stock prices have been decimated in the wake of the
March 2011 Fukushima disaster, which led to Japan closing its
nuclear reactors. urn:newsml:reuters.com:*:nL8N1BZ4MW
(Reporting by Lewis Krauskopf; Editing by Andrew Hay)
((lewis.krauskopf@thomsonreuters.com; 646-223-6082; Reuters
Messaging: lewis.krauskopf.thomsonreuters.com@reuters.net,
Twitter: @LKrauskopf))
Keywords: USA TRUMP/NUCLEAR STOCKS