NEW YORK: Donald Trump's call for an expansion of the United States' nuclear capabilities has shone a spotlight on a group of uranium stocks that has been battered over the past six years but have seen some new life since his presidential election victory.
A clutch of uranium companies including Uranium Energy Corp and Ur-Energy Inc trade at around $1 a share or even less and have market values of less than $400 million. Canada's Cameco, one of the world's largest producers, is an exception in North America, with market value above $5 billion.
Since the Nov. 8 election, U.S.-traded uranium shares are up between 15 percent and 30 percent, against a 14.8 percent rise for the Russell 2000 small-cap index. During the presidential campaign, Trump said the U.S. nuclear arsenal should be modernized and suggested Japan and South Korea could acquire nuclear weapons.
Some stocks have seen swings since Trump on Thursday tweeted that the U.S. "must greatly strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes."
Shares of Uranium Energy climbed for two straight days, while Uranium Resources Inc stock was little changed on Friday after rising 31 percent on Thursday in its two heaviest trading days since August. Still that brings Uranium Resources up to only $1.41 per share, resulting in a market value of $19 million.
Trump's comments "could mean a really big thing for uranium equities, however we really do need to see a sense of scale of what he is thinking," said Rob Chang, head of metals and mining research in Canada for Cantor Fitzgerald.
"If there is a notable increase in demand from the weapons standpoint, that could certainly be a huge boost," said Chang, who thinks uranium prices regardless are due to rise off of decade lows because of impending demand from utilities.
Trump on Friday sowed more doubt about his position on nuclear proliferation, reportedly welcoming an arms race even as his spokesman insisted an atomic weapons build-up was not likely to happen.
Chang said sentiment for the stocks has been helped by Trump's pro-nuclear comments, as well as Trump's nomination of Oklahoma Attorney General Scott Pruitt, a critic of federal environmental regulation, to head the Environmental Protection Agency, suggesting federal opposition to some mining projects may be relaxed.
"So it’s positive for all of mining, and uranium, in my opinion, is the most heavily regulated of all,” Chang said.
Uranium stock prices have been decimated in the wake of the March 2011 Fukushima disaster, which led to Japan closing its nuclear reactors.