The nuclear renaissance is centered in Asia, where China plans to more than double nuclear power capacity by 2020.
* Analysts see mid- to long-term demand outweighing supply
* Uranium One viewed as undervalued, good short-term bet
* Cameco positioned to shine in 2013 and beyond
* Global nuclear power capacity could double by 2030 (In U.S. dollars unless noted)
At the same time, Russia says it will stop downblending weapons grade uranium from 2013, creating what some expect will be a 20 million pound hole in an already tightening world supply.
Analysts say this gives plenty of upside potential to Canadian companies like Uranium One and Cameco Corp, one of the world's largest producers of the nuclear fuel.
"We're forecasting very significant deficits, mostly starting around 2012-2013, growing by 2020 to more than a 100 million pound deficit," said RBC Capital Markets analyst Adam Schatzker. "That's huge."
"Our view is we're going to see a strong uptick in the uranium price towards the end of 2011, probably more into 2012. For a lot of (investors) that's just too long to wait."
Increased demand and higher uranium prices would be good news for Saskatchewan-based Cameco, which has already signed a deal to provide uranium for plants that China is building. It is expected to sign a similar deal with India, where nuclear power capacity is targeted to quadruple by 2020.
Cameco recently cut its sales outlook for 2010, as some customers deferred deliveries into 2011. But with its Cigar Lake mine set to begin initial production in 2013, the company looks poised to be back in the game at the right time.
BMO Capital Markets analyst Edward Sterck said an oversupply in the market means it will likely be 18 months to two years before the uranium stocks really start moving again.
He has a price target of C$27 for Cameco, just above Friday's closing price of C$25.97, and rates the company as "market perform".
First Asset fund manager John Stephenson, whose firm holds shares in both Cameco and Uranium One, is more bullish.
"If you wait until the plants are built and the uranium has been ordered and shipped and delivered, you've probably missed the run up in the prices," he said.
"If you buy now, when there's kind of blood in the streets, you're going to be well rewarded in 12 months time."
The spot price of uranium peaked at $136 a pound in June 2007, before the world economic crisis began, and is now at around $45 a pound. Sterck said that while the price will likely to be steady into 2011, it could quickly climb back to the $70 range if China starts stockpiling the fuel ahead of a likely shortage.
The 440 working reactors in the world today need nearly 69,000 tonnes of uranium annually, but the World Nuclear Association says that could double by 2030, if all the proposals for new reactors go through.
LOOKING TO KAZAKHSTAN
With so much interest focused squarely on the long term, analysts see Vancouver-based Uranium One as one company that may give investors short-term gains.
The company's stock rose as much as 23 percent on strong production numbers released earlier this month, although the share price has eased a little since then.
The company mines primarily in Kazakhstan, dubbed the "Saudi Arabia of uranium," thanks to its massive, high-quality reserves.
The low cost of mining in the former Soviet republic, coupled with the quality of the ore, has been key to Uranium One's recent success.
But it's been a bumpy ride for the mid-tier miner. With shareholders set to vote Tuesday on a deal that will see Uranium One sell a controlling stake in itself to a division of Russia's state-owned Rosatom, the stock is bound to keep moving.
"I think there is still some hesitancy from some investors with respect to the prospects of a Russian-controlled company," said Schatzker, who has a price target of C$5.25 and a "market outperform" rating for Uranium One.
The stock closed at C$3.44 on Friday.
Schatzker said the deal with the Russians should actually help Uranium One by providing a guaranteed market and likely making it easier to operate in sometimes-volatile Kazakhstan.
"The company, from a risk standpoint, is better off now with the Russians," he said, adding that Uranium One will likely outperform its production estimates in 2010.
He said the real boom will come in three to five years, when demand from power companies outweighs the supply.
"At a certain point we'll start to hear a lot of 'sorry we just have nothing to sell'," said Schatzker. "That will create a little bit of a panic."