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Why Now Could Be The Time To Buy Uranium Stocks


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Uranium Stocks Have Been Out of Favor Recently

Uranium StocksShares of Uranium Stocks associated with uranium producers and the uranium industry had been experiencing steady gains in recent years, as dozens of new nuclear energy power generating facilities were in the planning and construction stages around the world, and investors anticipated a surge in demand for uranium products.  This new wave of nuclear power generating station building was due to increasing demand for electricity in the developed and developing world, especially in Asia.  Even in the United States, which has not built a nuclear power generating station since the 1970s, plans were being drawn up for building new nuclear power generating stations.  This renewed interest in building nuclear power generating stations caused Uranium Stocks to increase in price in recent years in anticipation of increased demand for uranium products.

The new interest in building nuclear power generating stations was being driven by demand for electricity that is produced in a manner that does not contribute carbon emissions.  While the world demanded electricity to power modern economies and lifestyles, there was growing concern that electricity produced by burning fossil fuels, such as coal, is contributing to global warming, as the carbon emissions from these fossil fuel power generating facilities are substantial.

The steady increase in the price of Uranium Stocks came to a sudden end in early 2011, and a sharp selloff in Uranium Stocks occurred, after Japan’s Fukushima nuclear power generating station was hit by an earthquake and tsunami in March of 2011, and the operators of the facility lost the ability to cool the nuclear reactors.  The loss of cooling capacity caused the nuclear fuel rods in the reactors to melt and release substantial amounts of radiation into the environment.  This serious nuclear accident has caused many countries to rethink their plans for building new nuclear power generating stations, which has called into question future demand for uranium products and the revenue and profit outlooks for Uranium Stocks.

Why Now Could Be The Right Time to Buy Uranium Stocks

Historically, the best time to buy stocks is when nobody else wants to buy them.  Right now, interest in buying Uranium Stocks is at a multi-year low, as indicated by the more that 50% reduction in price of the Uranium Stocks Global X Uranium ETF (URA) Exchange Traded Fund (ETF) during 2011, from over $20 in early 2011 to approximately $10 per share in August 2011.  However, this downtrend in Uranium Stocks is unlikely to continue, and now could be the right time to buy Uranium Stocks for a long term investment.

The bullish factors in favor of uranium price increases and rebounds in the valuations of Uranium Stocks include long term growing demand for uranium and the failure to cancel plans for new nuclear power generating stations in large and growing energy consuming nations such as China and India.  While some developed countries such as the United States, Japan and Germany appear to be shying away from building new nuclear power generating capacity, rapidly developing countries such as China and India are pressing ahead with plans for massive increases in nuclear generating capacity, which will keep demand for uranium high in coming years, which should help Uranium Stocks recover from their 2011 losses.

While making an investment in a stock sector that is down 50% in one year can be difficult to contemplate, now may be the perfect time to buy Uranium Stocks in anticipation of a recovery.  With the world facing both peak oil production, which will send oil prices higher in the longer term, and growing concerns about global warming, demand for uranium products and the resulting positive effect on the price of Uranium Stocks are potential long term investment factors that should not be ignored.

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