4 Uranium Stocks to Buy in 2022
By Jason McIntosh | Published 13 April 2022
Which uranium stocks should you buy now?
As always, the charts play a big role in identifying the best opportunities in uranium stocks. They help us assess the possibilities, as well as the risk and reward of individual uranium companies.
Let’s have a look at 4 stocks now…
Cameco (NYSE:CCJ) is a Canadian-based company and the largest listed producer. It was one of the best performing stocks on the stock market during the last bull market, rallying by over 1,700%.
The uranium market is relatively small, and when it gets going, it can move a long way. And this is why I believe it’s best not to short circuit the profit potential by trying to be jumping in and out of these potentially very big trends.
Here’s a chart for Cameco:
While the medium to longer term outlook is positive, Cameco’s current price doesn’t offer an asymmetric entry point. The share price is stretched above its moving averages, which increases the risk of a near term pullback.
If I already owned Cameco, I’d continue to stay on the trend. But I’d be hesitant to buy at current levels. I prefer to keep my risk tight and my upside big, and Cameco doesn’t have those dynamics at the moment. There could be a better entry point in the coming weeks.
I’ll show you a stock that I have in my portfolio. It’s called the North Shore Global Uranium Mining ETF (NYSE:URNM). It’s a U.S. listed ETF that owns a portfolio of uranium stocks from around the world. I bought into this stock in December 2020, and it’s been in a great trend.
Here’s the chart:
But many people find medium-term trends hard to stay with. It’s hard because of the pullbacks along the way. But the pullbacks are part of doing business with a trend-following strategy. Just look at some of the corrections in URNM… 30%, 25%, 42%… they’re tough for a lot of people to sit through. Many people struggle with mild pullback like 10% or 15%.
This is why having a calculated trailing stop can help. A calculated exit point means that you know exactly when to sell. This removes a lot of the uncertainty around what to do and can help stay on large trends.
And that’s what I do through my Motion Trader subscription service. It’s calculating wide trailing stops to help my subscribers stay in these big trends. And that’s what I’ve been doing myself. These moves don’t always happen quickly. The key is to stay on with them for as long as possible.
Just look at my own entry point… the stock price is up by over 160% since December 2020. But it hasn’t happened overnight. These big moves take time, and you also need the patience to ride with them. It’s also important to give them lots of room to move… that’s what a calculated trailing stop can help you do.
Now, I’m going to jump to a couple of other stocks which do potentially offer some entry opportunities, they’re ASX-listed uranium stocks. I’m going to start with Boss Energy (ASX:BOE).
Here’s the chart:
This is an interesting stock. It’s been a big uptrend since 2020, and then over the seven months since September, it’s been in this extended consolidation or trading range. And I think this could be a base for the next advance. I bought some of this stock during the week. It didn’t strictly follow my momentum rules, this is more of a discretionary trade. It’s still based around my trend-following principles, but I’ve used a risk assessment approach to buying this.
Let me explain what I mean…
I’m working on my big-picture view of uranium and I’m looking at the overall momentum I’m seeing in the uranium price. We saw BOE move sharply higher in February. The move was a bit like the current fast move in Cameco, and I don’t like buying stocks after a quick advance.
As I said earlier, when a stock gets well above its moving average, it becomes vulnerable to a pullback. The moving averages work a bit like gravity and the share price ultimately pulled back to the moving average. So, I don’t like buying when the share price runs too quickly, because even though the trend is still well and truly intact, you can wear quite a bit of pain when they pull back.
But then we got a pullback in BOE during March. Gravity pulled it back, and it came back to those moving averages. It also formed a support base around $2.20. So, I bought a position at around $2.33. My reasoning was that I was buying just above support, and I reasoned that I could put a stop loss around $2.10, maybe a touch lower.
When you work that out from a stop-loss percentage, I had about 10% of risk. I’m risking 10% to get into a stock which has the potential trade well beyond $4 over the year ahead. And so, I’m in at $2.33.
Boss Energy has the potential double. It could triple. It could quadruple, and I’m in for a risk of 10%. So, that’s what you call asymmetric risk/reward. I’ve got relatively small risk. But I’ve got big potential upside and I’m getting into a stock which is potentially going to be carried along by what could be a mega-trend in uranium. It does have the makings of that. Maybe it won’t be a mega-trend, but we never know. We never know in advance. All we can do is work on possibility and follow trends. And it’s setting up.
Just on Boss Energy, it’s a really interesting stock. It’s not producing at the moment, but they’re close to making a final decision on a site in South Australia. They say they could be producing 3.3 million pounds of uranium per annum, which would make it a globally significant producer. And they think they could be producing uranium within 12 months of a final decision. So, a very interesting play.
Now, another ASX uranium stock is Paladin Energy (ASX:PDN). It also has a lot of upside potential.
Let’s start with the chart:
It had a strong move higher in September with the uranium price. And then when uranium started to consolidate, Paladin went into an extended consolidation for several months, and started to drift back. But that pullback has formed a distinctive pattern on the chart.
In technical analysis, one of the patterns we look for is a flag, or flagging formation, where you have a strong rally followed by a downward slopping trading range… so, it takes the appearance of a flag on a pole. And then from there, you get a breakout to the top side and the price goes for another run. That’s the theory of a flag. This is probably a bit too big to call a flag. It’s more of a downward-sloping trend channel but it serves the same sort of purpose in that it looks like a consolidation, and now we have a breakout.
So, where could this go from here?
It’s the same sort of situation as Boss Energy. Unlike Cameco, which is stretched away from its moving averages, Paladin is just above its moving average, and it’s broken above a downward trend line. We could get some near-term consolidation, but momentum appears to be building.
Let’s just quickly look at a weekly chart (see video). It just shows what could happen in uranium stocks. I don’t know if Paladin can get back to its all-time high. But even if it were to get to $3 or $4 dollars from where it currently is (at 90 cents), we’re talking about big triple-digit gain potential.
My trading approach is to buy stocks with good risk-reward parameters, and then ride trends for as long as possible with a wide trailing stop. Stocks like Boss Energy and Paladin can be portfolio makers. They can really set up your portfolio, because you can potentially stay on these trends (if they develop) for one to three years, for a big medium-term uptrend.
You always give back some profit at the end of a trend. But it’s the big chunk in the middle that we’re aiming for… that’s where the trend followers make so much money.
Where to invest now?
Looking for ASX stocks to buy now, as well as off the radar ideas most people don’t know? Our algorithms scan the stock market daily for medium term investment trends. We then tell our members precisely when to buy shares. And most importantly, we tell them when to sell.
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I'm Jason McIntosh, the creator of Motion Trader. My career began in 1991 on the trading floor at Bankers Trust. Nowadays, I trade my own systems from home in Sydney.
Motion Trader is for investors who value robust analysis, data driven entry and exit signals, commentary, and education. I use engineered algorithms to identify when to buy and sell ASX stocks. No biases or guesswork, just data driven signals.