Worldwide acceptance of nuclear energy in terms of safety will continue to be a top-of-mind issue in the realm of alternative energy. But there are other factors that could propel nuclear energy use and, subsequently, more gains for uranium.
Notably, the use of nuclear energy in data centers could help bring it to the forefront as a viable renewable energy source. With the world becoming increasingly reliant on technology and data, nuclear energy can serve a purpose here.
“Nuclear energy is also starting to make inroads in the data center industry, which is quite power intensive,” Yahoo Finance reported, noting that there’s a buzz around small modular reactors, or SMRs for short. “Right now, all the hype in the industry is about SMRs, and there was a major development in this arena in October 2023. This was when SMR maker NuScale Power Corporation teamed up with data center infrastructure provider Standard Power to develop 2GW nuclear powered data center facilities.”
The byproduct of further development in data centers using nuclear technology means more prospects for growth. Given that, hedge funds are looking at the investment potential of nuclear energy, which should, in turn, generate a buzz for uranium stocks.
“Uranium’s potential for the renewable energy future has not gone unnoticed by hedge funds as data from Bloomberg shows that hedge funds are upping their bets on uranium stocks as the price of the commodity marks a 125% growth since 2020,” Yahoo Finance added, looking to companies like BHP Group Limited, NexGen Energy Ltd., and Cameco Corporation for potential uranium stock plays.
A Single ETF for Uranium Mining Exposure
While single stocks can offer opportunities in ancillary services that support uranium such as miners, investors can get easier exposure to these growth prospects in one exchange traded fund: the Sprott Uranium Miners ETF (URNM). The aforementioned Yahoo article noted Cameco Corporation as a potential play, which is actually one of the top holdings (weighted at 15% of the fund as of November 6) in URNM.
With its 0.83% expense ratio, URNM tracks the North Shore Global Uranium Mining Index. This index follows the performance of companies that devote at least 50% of their assets to the industry. This may include mining, exploration, development, and production, or holding physical uranium, or owning royalties. It could also include engaging in other, nonmining activities that support the mining industry.
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