Stocks in the nuclear energy space have had a very volatile year, but with sentiment moving bullish on the sector in recent days, Paladin Energy shares (ASX: PDN) deserve a closer look.
Despite a pullback in today’s session, where the shares lost 4.14%, over the past month, Paladin Energy’s stock price remains firmly green, gaining 36% in the period. Zooming out to look at a couple of other time-frames tells part of the volatility story better than words alone. On a YTD basis, PDN has added 23.66%, where the past 5 months (even accounting for the recent bullish rally) has seen the stock fall 30% from the May highs.
A quick glance at the 1 year chart below with daily candles is starting to resemble a rollercoaster, with the undulations potentially a little rough for those with a lower risk profile. So why are we seeing the sudden bullish swing?
One of the major catalysts behind this ascent is the news of Google, Microsoft, and most recently Amazon’s intention to tap into the domain of nuclear power, an announcement that has energized market sentiments around uranium shares. Amazon are said to be committed to investing more than $500 million USD in order to fuel the energy demands of AI for one. The initial phase of this grand scheme involves exploring the potential for a small modular nuclear reactor near an operational nuclear power station.
Uranium futures have also been climbing. Market analysts attribute recent spikes in uranium prices to a bullish demand outlook for nuclear power, prompted by China’s economic stimulus and sustained investment in nuclear capabilities by heavyweight U.S. tech corporations, including Amazon and Microsoft.
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As the market wades through the flurry of excitement, potential investors may wonder if the window of opportunity has vanished. While past performance isn’t an infallible guide to future results, the prevailing analyst sentiment, alongside the ongoing developments within the nuclear power industry, suggests that Paladin Energy might have more to offer. If AI is here to stay, and mega-cap tech have decided that nuclear is going to be the energy source of choice moving on into the years ahead, then we can expect the demand curve to continue to rise. The time it will take for some of these intended projects that investment seems to be committed to at this stage may be prohibitive for those with a shorter term view of the markets, but the longer term bull case seems to be in tact as long as the commitment remains.
Nonetheless, with speculative investments such as uranium, prudence and a comprehensive assessment of one’s risk tolerance remain essential. Each investor must weigh whether jumping aboard what is a volatile asset class at this time meets their financial goals and investment strategy.
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