Uranium stocks trend higher today as metal prices continue to climb. Reports also indicate that retail investors are eyeing uranium-related stocks as the next meme game.
Shares of Uranium energy (NYSEMKT:CUE), Cameco (NYSE:CCJ) and Dennison Mines (NYSEMKT:DNN) are each trending this morning as the spot price of uranium rises to $51 a pound, up 21% year-to-date as Russia invades Ukraine raises concerns about supply constraints.
There are also media reports of retail investors targeting uranium stocks in an effort to skyrocket their prices, as has happened to companies such as GameStop (NYSE:EMG) over the past year.
What happened with the uranium stocks
Uranium prices rose along with other commodities like wheat, oil, nickel and gold. Nickel and wheat prices have hit record highs in recent days, while prices for other commodities are at multi-year highs.
It appears retailers are targeting the radioactive metal as it is a key ingredient used to power nuclear reactors, and the spike in uranium stocks comes amid the threat of an energy crisis. Right now, oil prices are trading above $110 a barrel.
On social media and message boards, investors are betting that nuclear power will be used alongside renewable energy sources to decarbonize the planet. In turn, they believe that nuclear energy will become a more important part of global energy strategies as oil becomes more expensive.
Russia is the world’s third largest oil producer and Ukraine is home to Europe’s largest nuclear reactor, used to power much of the continent.
why is it important
The rally in uranium stocks is good news for related individual stocks. Shares of CCJ are up 25% year-to-date and are now up 74% over the past 12 months. DNN’s stock has grown 70% over the past year. The bet that nuclear energy may become a higher priority as oil prices reach new highs is positive for the uranium industry.
However, a meme rally that pushes uranium stocks to exorbitant levels could ultimately falter as it has for other stocks. GameStop shares are now 70% below their 52-week high of $344.66 per share.
What’s next for UEC, CCJ, DNN
The rally in uranium stocks looks likely to continue in the near term. The duration of the recovery will ultimately depend on whether a resolution of the crisis in Ukraine can be achieved and whether oil prices continue to rise.
Some analysts are asking for $200 a barrel of oil later this year. Uranium stocks will likely remain volatile, especially if they end up becoming memes. Investors should proceed with caution.
As of the date of publication, Joel Baglole had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.