Uranium stocks starting to glow

A turn in sentiment will spark a re-rating of uranium stocks.

This is something you don’t usually see in this market. Sentiment towards uranium-related stocks has turned positive – at least for now.

Junior miner Peninsular Energy (PEN) and uranium enrichment technology developer Silex Systems (SLX) are trading in the black on speculation that the nuclear power fuel is heading for a bull market after enduring a more than 20% collapse in the price of the commodity in 2013 to around $US34 a pound.

Silex is up 1.9%, or 4 cents, to $2.17; while Peninsular gained 4.8%, or 0.1 of a cent, to 2.2 cents at 12.26pm AEST. This stands in contrast to the 1.5% loss for materials stocks on the ASX All Ordinaries Index.

Canadian-based Scotia Capital issued a report overnight predicting that uranium will fetch $US70 a pound in 2017 and that the commodity will enter into a bull market within the next 18-months.

A turn in sentiment will spark a re-rating of stocks that are linked to the nuclear material as these stocks are among the most shunned by investors last year due to a poor outlook for the nuclear power industry.

The change in attitudes is likely to see Silex surge in 2014 after its 35.8% slump the previous year as investors are sceptical that its strategic partner, Global Laser Enrichment (GLE), will sign off on building the first commercial plant in the US to enrich uranium using the Silex laser. GLE is a joint venture between industry giants General Electric, Cameco and Hitachi.

You can read our detailed report on Silex here.

Peninsular and Silex are part of the Uncapped 100.

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