2 ASX uranium shares to buy for 80%+ returns

Bell Potter thinks that these stocks could deliver very big returns for investors.

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The uranium industry has been generating big returns for investors over the last few years.

But if you thought the gains were over, think again.

The two ASX uranium shares listed below have been named as buys and tipped by Bell Potter to rise strongly from where they currently trade. Here's what you need to know about them:

Lotus Resources Ltd (ASX: LOT)

The first ASX uranium share that could be a buy is Lotus Resources. It is an Africa-focused advanced uranium player that owns an 85% interest in the Kayelekera Uranium Project in Malawi, and 100% of the Letlhakane Uranium Project in Botswana.

Bell Potter believes that deep value is emerging in its shares based on its long term uranium price estimates. In fact, it suggests that if you are waiting for a cheap opportunity, then now is your time. It said:

At the current stock price, assuming our risk discounts for Kayelekera and Letlhakane, and a dilutionary equity raise, LOT is pricing a ~US$63/lb spot uranium price into perpetuity. Assuming these two contracts are at or near the current long-term offtake pricing levels of US$80/lb, this implies that LOT is deep value. Cost overruns for both Opex and Capex would need to be substantial to justify such discounts, with the likely conclusion being that equity markets ascribe little value to Letlhakane and/or hold a significantly more negative view around uranium pricing.

Bell Potter has a speculative buy rating and 70 cents price target on its shares. This suggests that they could rise a massive 240% from current levels. Though, given its speculative rating, this may only be suitable for investors with a very high tolerance for risk.

Paladin Energy Ltd (ASX: PDN)

Bell Potter thinks that Paladin Energy could be a great way to gain exposure to the uranium market.

Particularly given that it could be regarded as a lower risk option in the space. It said:

PDN operating a uranium asset in a bull market for the commodity is likely to command a premium to the sum-of-the-parts valuation in our opinion. We have applied a 10% premium to our base valuation which is supported by 1) PDN being a current producer with a comparatively lower risk restart project at Langer Heinrich, and 2) PDN offering domestic institutional investors greater liquidity than peers. Additional factors which may support this thesis would include consolidation and M&A activity.

The broker has a buy rating and $15.70 price target on the ASX uranium share. Based on its current share price of $8.76, this implies potential upside of approximately 80% for investors over the next 12 months.

Motley Fool contributor James Mickleboro 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.

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