The Deep Yellow share price surged 37% in August. Should ASX uranium shares be on your buy list?

There are 6 reasons to consider ASX uranium shares for your portfolio, according to BetaShares.

| More on:
An athlete runs fast with a trail of yellow smoke billowing out behind him.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Deep Yellow Ltd (ASX: DYL) share price has been deep in the green recently, up 37% in August alone.

But it wasn't the only ASX uranium share enjoying significant support.

Paladin Energy Ltd (ASX: PDN) shares went up 15%, and Boss Energy Ltd (ASX: BOE) shares rose 19% over the month.

So, what's going on here?

Well, according to fund provider BetaShares, there are six trends driving ASX uranium shares higher.

Let's review.

6 trends driving ASX uranium shares higher

Uranium contracting at a decade-high

There was higher demand for long-term uranium supply contracts in the first half of 2023. BetaShares says the world's largest public uranium company Cameco Corp (NYSE: CCJ) reckons 2023 will be the biggest year of contracting in more than a decade, based on the current run-rate.

Potential disruptions to supply

As we all know, not many Western nations want to trade with Russia these days. According to the World Nuclear Organisation, the former Soviet republic Kazakhstan, on the Russian border, is the world's largest uranium producer. In 2022, it accounted for 43% of global uranium mining production. Russia itself accounts for 5% of production. And a coup just occurred in Niger, which accounts for 4% of production.

Project delays

Uranium looks to be an emerging area of global mining as the world seeks greener energy sources. There hasn't been huge demand for it before, so many uranium assets haven't been fully developed yet. Building a mine is a complicated business and delays obviously impact the global supply chain. Take the woes of Peninsula Energy Ltd (ASX: PEN) as an example. The ASX uranium share crashed 25% last week after the miner announced a more than 12-month delay with its Lance mine in Wyoming in the United States.

Global uranium inventories depleting

BetaShares points out that secondary supplies of uranium are running out, and new supplies from mines will have to fill that void. Secondary supplies include utilities' inventories and reprocessed spent fuel.

Decarbonisation

Perceptions of ASX uranium shares are possibly shifting in light of the AUKUS defence deal and the need to develop green energy sources in this era of global decarbonisation. Nuclear energy is reliable and CO2-free and it will likely have a strong place in the energy mix of the future.

57 nuclear reactors under construction

According to the International Atomic Energy Agency, there are about 440 reactors in operation globally and 57 under construction, predominately in China (21 reactors) and India (eight reactors). Seven of those 57 are expected to be completed this year, and another 11 in 2024. BetaShares points out that other reactors have increased their capacities and extended their lifespans. All of this will likely add up to more demand for uranium and an increase in the uranium price.

Uranium among the few commodities to rise

The Australian Department of Resources predicts uranium will be one of the few commodities to rise in price over the next five years.

As we previously reported in May, the department was expecting an FY23 average price of US$51 per pound. It projects an average price of US$67 per pound by FY28.

Uranium is currently trading for US$58.50 per pound, up 18% year over year.

What's boosting the Deep Yellow share price?

Deep Yellow was the leader among the larger ASX uranium shares in terms of share price growth last month.

It looks like the completion of a 656-hole, 36,647-metre drilling program at the Mulga Rock Project in Western Australia may have given the ASX uranium share some extra momentum.

Deep Yellow says it now expects to commence a revised definitive feasibility study in Q2 CY24.

It says there is "potential both to increase the available uranium resource and extend the current 15-year life of mine".

Deep Yellow CEO John Borshoff reckons the company is "the best uranium junior globally," because it has mines in different jurisdictions, which is convenient for off-takers, and its mines have other minerals.

He said:

An exciting part of the Mulga Rock MRE upgrade will be gaining a better understanding of the critical minerals' component of the Project, which includes metals such as copper, nickel, cobalt, zinc, and rare earths, particularly neodymium and praseodymium.

If it is feasible for us to recover these critical minerals, in parallel with the uranium, it presents a strong opportunity to materially enhance Project value.

In terms of uranium, he said: "Over the past five years, we have successfully delivered on our vision to establish a Tier-1 uranium platform and the next five years is focused on execution to production."

Which ASX uranium shares should you buy?

Here at The Fool, we always recommend a fundamental analysis of any ASX shares you're considering buying for your portfolio.

But just for fun, let's do a quick canvas of the experts to see what they think of the ASX uranium shares we've mentioned above.

According to the Westpac trading platform:

  • Six out of six analysts covering Paladin Energy shares rate them a strong buy
  • Two out of two analysts covering Deep Yellow shares rate them a strong buy
  • Three out of three analysts covering Peninsula Energy shares rate them a strong buy
  • Three out of six analysts covering Boss Energy shares rate them a strong buy, and three say hold.

The Deep Yellow share price closed at 96 cents on Tuesday, down 2%.

Among the other ASX uranium shares, Peninsula Energy shares fell 4.4%, Paladin Energy shares lost 1.93%, and Boss Energy shares rose 0.26% today.

The S&P/ASX All Ordinaries Index (ASX: XAO) closed down 0.12%.

Should you invest $1,000 in Eagers Automotive Ltd right now?

Before you buy Eagers Automotive Ltd shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Eagers Automotive Ltd wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Goldman Sachs says these ASX 200 stocks are strong buys

The broker is feeling very bullish about these stocks. But why?

Read more »

A bland looking man in a brown suit opens his jacket to reveal a red and gold superhero dollar symbol on his chest.
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in May

These stocks could be best buys this month according to the broker.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Man looking upwards contemplating which shares to buy
Broker Notes

CSL shares have climbed 10% since 11 April. Is it too late to buy?

What are analysts saying about this biotech giant after its recent rally? Let's find out.

Read more »

Excited couple celebrating success while looking at smartphone.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in May

The broker is feeling bullish on these names this month. Let's find out why.

Read more »

Red buy button on an apple keyboard with a finger on it representing asx tech shares to buy today
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Share Market News

ASX shares in April: 8 key takeaways according to Macquarie

Here are eight key takeaways from April, according to a new note from the broker.

Read more »