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Good morning, and happy October! Jeff here again. |
It's a new month, and thank God, because last month was a bloodbath for traditional buy-and-hold investors (though I have to say my options trading portfolio held up very well!). |
The major indexes all saw red, with the S&P down 5.5%, the NASDAQ down 1.1%, and the Russell 2000 slipping 7.3%. |
We are still solidly green on the year but have now given back all of summer's gains. |
If you sold the market in June and came back today, you would be at the exact same price! |
I can't say the same for my top "Bright Idea 💡" today. Not only did it defy the markets, but it jumped over 13% during October and over 65% from the lows it saw in July! |
Folks, if you haven't heard of this company, you need to pull it up right now: |
Uranium Royalty Corp. (Nasdaq: UROY) |
And the factors that have pushed it up — bucking broader trends in commodities as well as the broader market — show no signs of stopping. |
UROY is riding what I call a "mega-trend" right now. |
That is, a trend so strong that any stock in the sector is going to get dragged higher. 👉Think of what the "AI mega-trend" did to any stock remotely related to AI to start this year. |
We are seeing the same thing with Uranium stocks right now, and it seems we're just hitting the sweet spot. |
I think UROY is an easy, instant way to start riding this trend… assuming you like riding mega-trends? |
There are 3 big reasons why I think this mega-trend is going to stay firmly in place: |
A Hedge Against Inflation
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It's no secret that in times of inflation, commodities are an excellent hedge. Ever since inflation took off around January 2021, the S&P commodities benchmark, GSCI, has rallied 43%, while the NASDAQ is up only 1% (and it's threatening to give up even that).
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Leading the charge have been energy-related commodities such as lithium, which exploded some 11,500% from 2021 to 2022 but lost some of its luster since then… |
Natural gas, which also had a huge rally of nearly 500% from the lows, and then a similar cooldown… |
And crude oil, which didn't climb nearly as high, but has held on to much of its rally. |
You see, all three commodities came down beginning this January as fears of inflation subsided and the stock market rallied. |
But now Powell is warning that the fight against inflation "still has a long way to go" and the market is on shaky legs. |
This has led to significant rises in commodities as a whole, but especially in these energy-related commodities, as you can see on the charts above. |
Uranium is an often overlooked player on the same field. |
And unlike lithium, natural gas, and crude oil… |
It has not only held on to its rally since 2021, it's hitting new, multi-year highs: |
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As you can see, it has soared since January 2021, consolidated for nearly a full year, and has gone up dramatically since this April, culminating in a whopping 15% increase last month alone. |
This is the most expensive uranium has been since its $73-per-pound high before the Fukushima disaster in 2011. |
And take a look at the far right of that chart. Is that a parabola or a completely vertical line? I don't know, but I do know it gets me excited. |
While I mentioned the success of the GSCI index since 2021, this year it has been mostly flat, rising only 3.2% YTD. Compare that to the 43.2% jump in uranium YTD. |
Among inflation hedges, commodities stand out, while among commodities, uranium is a clear champ. |
Supply and Demand Are Clashing |
So what's causing this years-long rally in uranium that's now going vertical? |
As you might expect, it's complicated. Inflation got the ball rolling in 2021 as investors poured into commodities, and Russia kicked it along in 2022 after its invasion of Ukraine upended global oil markets. |
Countries were already eager to reduce their reliance on fossil fuels because of carbon emissions, and nuclear power is an increasingly appealing alternative as memory of the Fukushima disaster fades. |
Russia playing rogue on the world stage was all these countries needed to lean into nuclear and away from Russia's abundant fossil fuels. |
As Markets Insider declared last month, "Uranium is the new gold as the world goes nuclear once again." |
On the supply side, Canadian uranium giant Cameco — which is responsible for about 17% of world production of uranium — announced last month a 9% reduction in its production forecast for 2023. |
And what do increasing demand and decreasing supply mean? I sure hope you guessed it: increased prices. |
That tailwind, coupled with the dogpile into commodities last month, sent uranium up, up, UP! |
And as SP Angel mining analyst John Meyer told Reuters last month, the ceiling isn't in sight: "We see prices rising year-on-year for next 10-20 years or till the world finds another source for large scale un-interruptible base load power with a low carbon footprint." |
UROY Offers Diversified Exposure with Less Risk |
We've established why uranium is a hot idea given today's market conditions, but why UROY? |
Unlike other commodities, uranium does not trade on an open market. Investors looking to gain exposure to this metal must look to mining companies, physical funds, or ETFs. |
Among all those opportunities, there's a gem that stands out to me right now – UROY. |
As InvestorsObserver notes, "Uranium Royalty Corp (UROY) is the highest overall rated company in the Uranium industry with an overall score of 83." |
The company describes itself as "the first and only pure-play uranium royalty company" and says its strategy is "to gain exposure to uranium prices by owning and managing a portfolio of geographically diversified uranium interests, including uranium royalties and streams, debt and equity investments in uranium companies and holding physical uranium from time to time." |
The upshot for us is that UROY has a hand-selected, diversified portfolio of uranium interests, and since uranium began its mega rally in April, it's outperformed the metal's spot price. |
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I think UROY's strategy of investing in the royalties of uranium producers gives it an edge over other companies in the sector. |
You can see this outperformance in the chart above, and I see no reason why it should stop anytime soon. |
As I mentioned earlier, while most uranium miners experienced double-digit gains since July this year, UROY rewarded investors with a potential 65% move in the same time frame. |
I also like the fact that UROY has a $290 million market cap (per Yahoo! Finance), so it's no pipsqueak company subject to wild fluctuations. Because it has a curated portfolio, it has the potential to continue outperforming the metal. |
In a report released last month, investment bank H.C. Wainwright reiterated its buy rating on UROY with an increased price target of $6.20 from its earlier $6.00 forecast. |
If that prediction holds, it means UROY still has over double-bagger potential in spite of its recent rally. |
Wrapping Up |
There's a lot more I could say about the rise of uranium — and really, it's a story that hasn't been talked about enough — and how UROY is the top candidate in this sector that I am watching right now. |
I think UROY is the best way to ride the "Uranium mega-trend"... with just one stock. |
But this email has gone on long enough. I hope I've piqued your interest enough to do your own research on this important metal and this promising company. |
I may send follow-up emails if this rally extends the way I think it will. In the meantime, do yourself a favor and check out UROY's resource-rich website plug the ticker into your trading platform today, and watch the action. |
I think you'll like what you find. |
To Your Success, |
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By the way… 👉 Text "RAGE" to 1-(888) 404-5747 to get all of my latest HOT STOCK ideas delivered right to your phone (make sure you put the 1 in!). |
*This investment involves substantial risk. Please see full disclosure below, and detailed discussion of risks and atypical results. |
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