As I write this all of the uranium miners are in rally-mode.
Last week I wrote an article about titled, "Is Now the Time to Buy Uranium Miners" as the share prices of the leading small cap uranium mining companies were plummeting.
I mentioned in the article about how the current sell-off in uranium, due to the catastrophic events in Japan, could offer an opportunity to average into one of the top small cap uranium mining stocks at very attractive prices. The company - Denison Mines (AMEX: DNN). The stock has rallied 40.3% since the low on March 15th, but is still 12.2% below pre-catastrophe levels.
Since writing that article I've had several inquiries about other small cap companies within the uranium mining sector and how they have performed since the aftermath in Japan.
Let's take a look.
As you can see above, all four of the leading small cap uranium miners are still well- below their respective pre-earthquake share prices.
The concern going forward will be announcements by China, India and other leading countries in the nuclear renaissance movement that may halt the construction of numerous nuclear facilities.
Over the short-term that might be true, at least to appease the nuclear pundits. But over the long-term, given the energy constraints by the leading emerging market countries, is it truly realistic for the world's growth centers to shut down nuclear energy full stop?
The supply deficit in uranium is real. If we look out over the next eight to 10 years, which is the amount of time it takes a nuclear power plant to become fully operational, the market is about 400 million pounds short of the demand currently needed.
The top 5 producers, which make up almost 90% of the uranium market, only produced 110 million pounds of uranium in 2010. In other words, uranium producers need to produce nearly four times the amount just to meet estimated new demand. The new supply will have to come from somewhere, or the price of the existing supply will need to increase to clear the market.
Even with Fukushima nuclear emergency the market for uranium is red hot, at least over the long-term. For investors, shares of the best uranium mining stocks could represent the best energy investment opportunity in decades.
The World Nuclear Association's (WNA) chart below sums up why now is the time to get into uranium related investments. The world will be using more uranium for years to come - and many great investment opportunities appear in the midst of a supply crunch.
Take the aforementioned supply crunch and add the fact that all of the above uranium mining companies are now selling at significant discounts and the only rational conclusion to arrive at is: the current sell-off offers an opportunity to average into the best small cap uranium mining stocks at a very attractive price.
The most direct way to profit from the inevitable growth in nuclear energy and the shortage in uranium is to buy shares in the most productive uranium miners in the world.
I have presented you with the four top small cap uranium miners.
This could be the perfect opportunity to invest in uranium mining small caps. There is no doubt that the aforementioned companies have experienced sharp declines over the last few trading sessions, but I think we could be witnessing a market overreaction to the tragic events.
I would expect to see volatility remain in the sector. All of the uranium mining stocks that I mentioned have bounced significantly off of their lows established on the 15th of March. I would expect to see range-bound movement until the Japanese aftermath comes to a conclusion.
As I stated last week, anyone investing in small cap uranium mining stocks would do well to average in. I would not be surprised to see a retest of the recent lows, but that only means that better prices are ahead. The way to play a crash is always to buy little and buy often.