Is Denison Mines Stock a Buy?
Since the Fukushima meltdown in Japan, nuclear power has been something of an unloved stepchild in the energy sector. Some nations have even sworn off the power source. But nuclear power isn't going away, and may be more important now than ever given the push toward lower-carbon emissions. Denison Mines (NYSEMKT: DNN) is betting hard that demand for uranium, the key nuclear power plant fuel, will grow in the years ahead. But should you bet along with it?
Since the Fukushima disaster in 2011, demand for uranium has fallen sharply, and prices for the fuel have declined to painfully low levels. Although historically based on long-term contracts, prices have been so low and demand so weak that some buyers have been willing to purchase on the spot market so they didn't have to tie themselves to what might have ended up being higher-priced long-term contracts. As a commodity, supply and demand are the key drivers of price, and major producers pulled back on the production front to help bring supply and demand back into balance. Prices have started to stabilize, but remain low enough that miner Uranium Energy (NYSEMKT: UEC) is buying on the spot market because it is cheaper than the cost of mining the nuclear fuel.
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Source Fool.com
