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Uranium – U308

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Question asked 26/07/2025

Uranium – U308

I think it's funny how so many analysts chose Paladin Energy as their favourite pick in the uranium space. It has been a fickle sector though, but I do believe, with news reaching saturation point, that it's about to enter a strong 'public participation' phase, simply because there is now a clear disconnect between the spot price and the equities. Can you offer maybe three alternative ASX stocks that the 'public' might gravitate towards?

Answer

Hi David,

We met with L1 Capital’s Rafi Lam not long ago, who described PDN and the other Australian Uranium stocks as very low quality from an operational perspective, and uninvertible as a result, though they like the theme overall. We do hold Paladin (PDN) which has proven to be a huge underperformer in an exciting space as the chart below illustrates – wrong stock in the right sector. We also own Cameco (CCJ US) in the US which is at the other end of the spectrum, is a lot bigger, more diversified, and has executed well – the share price reflects that.

However, we spent time with the PDN CEO on Thursday, and after a rocky road, we are of the opinion that PDN will now enter a period of better operational performance, with a new and more operationally focussed CEO than the last.

It may take time for PDN to emulate Cameco (CCJ US), the largest publicly listed uranium producer in the world by market capitalisation but we like the risk/reward around $7.50.

Rather than gravitating towards three alternative ASX uranium producers, assuming you agree with our bullish outlook on nuclear power/uranium we would defer to uranium ETF (URNM) which offers diversified global exposure for 0.69% pa – Deep Yellow (DYL) is its largest ASX position with a 5.1% exposure, placing it 5th by weight of the 42 holdings.

NextGen (NXG) is the other name we like in the space with a huge resource that will come online in a few years. A 3x stock exposure, mixed by size, geography and stage of development for us could be: CCJ, PDN & NXG, with Boss Energy (BOE) a potential alternative for PDN in this mix.

chart

Cameco Corp (CCJ US) v Paladin Energy (PDN)

LAST UPDATED 24/07/2025 15:52

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