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Uranium stocks dropped significantly last year after the Fukushima nuclear power accident. As fears of the danger of nuclear power plants spread from the public to the investment community, uranium stocks sold off. Even now, about 15 months after the accident, there hasn't been much of an uptick in uranium stocks and that may present an opportunity for investors.

First, let's take closer look at the carnage. Cameco (NYSE:CCJ), the largest pure play on uranium in the market with a market cap of close to $9 billion, is down about 50% off its 2011 highs reached just before the accident in Japan. Uranium Energy (NYSEMKT:UEC) was trading close to $7 a share in February of 2011. Now, it's trading at just under $3 a share, a fall of about 60%. Uranerz Energy (NYSEMKT:URZ) was trading close to $6 a share early last year and now trades at just over $1.50 a share, a fall of 70%.

The first half of the story is the drop in share prices. The second half of the story is the fundamentals. Despite the impact of Fukushima, the fundamentals of the uranium sector remain intact and appear poised for both near-term and long-term growth. There are currently 435 reactors operating, 62 reactors under construction, 156 reactors at the planning stage and 343 reactors under proposal. China, India, Russia and South Korea, the four major drivers of nuclear growth, have evaluated and renewed their commitment to nuclear power.

In China alone, government sources have announced plans to significantly increase Chinese nuclear capacity from 11GW today to possibly 86GW or more by 2020. With the emerging markets continuing to drive demand for nuclear power, the outlook for the uranium industry remains strong.

For 2011, global uranium consumption was approximately 175 million pounds while uranium production is estimated to reach only about 145 million pounds. To date, this shortfall has been made up from secondary sources of uranium such as government inventories, recycled materials, and down-blended weapons-grade material provided under the HEU Agreement between the U.S. and Russia, currently providing approximately 24 million pounds of supply annually and set to expire in 2013.

Despite this need for new production, current price levels in the range of $50 to $55 per pound are insufficient to incentivize the development of new conventional uranium projects. At current prices, for example, Kazakhstan, the source of nearly all production growth in the last decade, has indicated that no new uranium projects will be developed and, at the same time, is attempting to minimize further downward pressure on uranium prices by stabilizing its production levels. Over the course of the previous year, emerging supply constraints have also been exposed by operational challenges at existing mines and delays at development projects across the globe. Furthermore, secondary sources are expected to decrease over the long-term, especially with the expiry of the HEU agreement.

The uranium story has even made mainstream media. According to a recent Barron's article, "uranium prices are poised to steadily increase over the next few years..." Further, an analyst noted in the article that "most analysts expect the price of uranium to rise from current levels of $50 to $65 (a pound) to $70 a pound over the next two years." This increase in the price of uranium should be a boost for uranium stocks. An analyst on Seeking Alpha is even more bullish, suggesting that uranium could reach $200 a pound.

With that said, one uranium stock that's loved by investors and analysts alike is Uranium Energy. Uranium Energy is a U.S.-based exploration and development company focused on uranium production in the U.S. The company is the newest uranium producer in North America, operating the first new uranium mine in the U.S. in over six years. In 2011, Uranium Energy completed its first full year of production with a cumulative total of 236,000 lbs. of uranium produced at average cost of $16 per pound, which the company then sold at the current spot price of $52 per pound. Uranium utilizes the In-Situ Recovery (ISR) production method, which is a more cost-effective and environmentally friendly way of mining uranium.

Well financed to execute on its key programs, the company controls 28 projects in the U.S. with total resources of more than 41.5M lbs. U3O8. Uranium Energy's fully licensed and permitted Hobson processing facility is central to all of its projects in South Texas, eliminating the need to construct a new processing plant on site at each project.

Additionally, Uranium Energy controls one of the largest databases of historic uranium exploration and development in the nation. Using this knowledge base, the company has acquired and is advancing exploration properties of merit throughout the southwestern U.S., a region known as being the most concentrated area for uranium mining in the United States.

The company's strategy of acquiring exploration databases and leveraging those databases to generate acquisition targets has proven to be effective thus far. With plans to continue aggressively pursuing this strategy, Uranium Energy is well positioned to capitalize on the world's overwhelming demand for more uranium, more energy, cheaper energy, and a cleaner environment.

Analysts have a consensus target on the stock of close to $4.50, upside of nearly 70% from today's share prices. A recent article by a UEC investor suggested buying the dip in the stock when it was over $3.30 a share, now it's sitting even lower at $2.70, an even better entry point.

The combination of the drop in UEC's share price and the projected supply/demand imbalance creates an unparalleled opportunity in UEC. Just returning to pre-Fukushima levels would give investors a return of 150%, a return that any investor would get excited about. Taking into consideration the projected price increase in uranium and that projected return increases even further.

Source: Uranium Energy: An Under The Radar Uranium Play With Tremendous Upside

Additional disclosure: I expect to receive compensation for researching Uranium Energy (UEC). This fact does not impact my thesis. I took on this opportunity because of my strong belief in the company and its assets. The views expressed are purely my own.