Bank of America is bullish on uranium — and has a recommendation for investors looking to get in on the commodity. There should be a shortage of uranium through 2035, according to Jared Woodard, investment and ETF strategist at Bank of America. At the same time, demand is for uranium — which is a form of nuclear energy — is growing and the “third bull market” could be here. “Demand is rising amid resource nationalism and a global focus on energy security, with 101 reactors expected to be built or extended in next several years,” Woodard said in a note to clients Tuesday. “There is also a chance of a further bullish policy shift as countries realize the necessity of nuclear power for any plausible path to decarbonization.” Uranium itself is not traded on a public market, but Woodard said there are advantages to having exposure to the commodity in a portfolio because the last two bull markets brought returns greater than 500%. There’s also better risk-adjusted returns compared with other commodities and stocks, he said, even if a bull market is just starting. Woodard added that uranium exposure can help diversify a portfolio given its low correlation to other markets markets. To play the theme, Woodard recommended the Global X Uranium ETF (URA) , which he said is “one of the best ways into a market otherwise unfamiliar to many investors, with a good balance between liquidity and diversification.” URA 5Y mountain The URA He noted the ETF has the largest asset base compared with peers and the strongest inflows at $1.3 billion in the past two years. The URA increased assets by 51% in 2022, Woodard added. Woodard also noted the ETF has the highest number of energy, materials and industrial holdings in North America and Europe. That’s on top of an 18% stake in physical uranium. The URA has outperformed equities, fixed income and broad commodity indexes in this bull run, Woodard said. It’s up nearly 3% since 2023 began, though the ETF has had a bumpy ride over the course of the year. Woodard also said the URA is less expensive than similar sectors and industries, noting that it has a lower book value than comparable ETFs, equity sectors or indexes. He noted that only metal and mining, energy and material stocks have lower enterprise value-to-EBITDA valuations. — CNBC’s Michael Bloom contributed to this report.
