Certainly all things tied to uranium severely underperformed last year given the Japan power plant disaster following the tsunami. The ratio trended lower all year and never really captured anyone’s attention given concerns over a slowdown in the industry and public fear over the dangers of nuclear fallout. However, nuclear energy is not going away any time soon, and the downside move may have been an overreaction in the stocks.
There is some stock specific risk certainly with the ETF given that Cameco (CCJ) makes up about 22% of the ETF, but that’s also because its the biggest stock play on the group. Interestingly over 55% of the holdings are Canada-based, with only 14% being U.S.-oriented. What this means if that should 2012 be a good year for equity markets outside the U.S., the overall exposure of URA to outside markets could help push prices higher than one might otherwise think.
The author, Pension Partners, LLC, and/or its clients may hold positions in securities mentioned in this article at time of writing. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.