Welcome back to our channel! In this follow-up video, we delve deeper into the uranium market, providing insights into price forecasts and sharing a crucial tool for filtering uranium stocks.
If you missed our previous video, be sure to check it out for valuable context: https://www.youtube.com/watch?v=xGuhAVcEfwo In recent weeks, uranium prices experienced fluctuations, dropping 6% to $100/lb before rebounding to $106/lb.
Despite these movements, the sector witnessed positive developments, including Japan's recognition of uranium as a critical mineral and significant acquisitions by the world's largest physical uranium fund managed by Sprott.
However, we maintain a cautious outlook on uranium prices in the near term, anticipating pressure due to supply growth potentially outpacing demand. Nevertheless, our long-term outlook remains bullish, considering uranium's position as one of the cheapest and cleanest energy sources.
Now, let's delve into one of the key tools we use for filtering uranium stocks: the EV to resource ratio. Similar to traditional valuation metrics like Price to Revenue or Price to Earnings ratios, this metric helps assess whether a stock is undervalued or overvalued, particularly for small-cap companies lacking revenue. Here's how it works: Calculate the Enterprise Value (EV) of a stock: Market capitalization + debt - cash.
Determine the resource estimate, typically found in a company's latest deck or website. Calculate the EV to resource ratio to obtain a $ per lb figure. Compare the result to global averages for uranium juniors. We provide a table showcasing average EV/resource ratios for uranium juniors globally, with African juniors at $4/lb and North American juniors at $6/lb. If a company's EV/resource ratio is below the average for its region, it may indicate undervaluation, warranting further research. We hope this tool proves valuable to investors navigating the uranium market. If you found this content helpful, please support our channel by subscribing, liking, and sharing our videos.