As we enter 2021, there are some interesting developments going on in the market. It seems likely that the economy is going to return to normal sometime in the middle of the year. There are hints that the most depressed sectors of the past couple of years like energy (XLE  ) and financials (XLF  ) are beginning to outperform. There is also bubble-like behavior in electric vehicle (EV) and alternative energy stocks.

This is certainly unusual. Until now, these stocks tended to trade in tandem with energy stocks as higher energy prices made these technologies more viable. One long-depressed sector that could benefit from these factors is uranium.

Uranium Overview

Uranium has been out-of-favor since the Fukushima disaster in Japan in 2011. After this, many new projects were canceled and some countries shifted away from uranium as an energy source. Uranium prices also trended lower which led to diminishing Capex in the sector.

However, this is now changing. New uranium projects are starting to be built. EVs also means that the demand for electricity is increasing. Using fossil fuels to generate electricity defeats the purpose. Wind and solar can't totally meet the demand given that it's not as viable in some areas, and there's still a need for off-peak power.

Additionally, the new generation of nuclear power plants is much safer and smaller with less chance of a catastrophe. Given the combination of a new energy bull market and the EV boom continuing. it's only a matter of time before uranium stocks are on investors' radar.

Uranium Stocks

Maybe the safest and most diversified vehicle for uranium is the Global X Uranium ETF (URA  ). Between 2011 and 2016, URA dropped by more than 90%. From there, it traded in a tight range between $8 and $16. In recent months, it's been strong and now looks ready to break higher.

In terms of individual stocks, the largest uranium stock on the U.S. market is Cameco (CCJ  ). Cameco mines and refines uranium. So, the stock is ultimately tied to uranium prices. Due to low prices, it's choosing not to mine so its revenues are coming from refining and processing uranium which it buys on the market, however, this means the company has significant upside if prices do meaningfully rise higher.