YELLOW CAKE, KAZATOMPROM, AND STALLION URANIUM: THREE WAYS TO PLAY THE URANIUM BOOM

THE NUCLEAR DEBATE IS BACK IN THE SPOTLIGHT

Nuclear energy is a polarizing issue. A week ago, talk show host Markus Lanz and former Federal Minister for Economic Affairs Peter Altmaier (CDU) engaged in a heated debate on ZDF about the merits and flaws of Germany's nuclear phase-out. As is well known, then-Chancellor Angela Merkel had announced this German solo move following the reactor disaster in Fukushima, Japan, in 2011. In the meantime, the last German nuclear power plants have been shut down. While Altmaier, then a member of Merkel's cabinet, continues to believe that this "did not harm" the country, Lanz countered by stating that Germany not only has "some of the highest electricity prices in the world" but, in terms of greenhouse gas emissions, also "one of the dirtiest energy mixes in Europe."

A statistic that Lanz cited to support his arguments is striking: To power AI data centers, the world will need additional energy in the future equivalent to the consumption of an industrialized nation like Japan—every single year! To meet this energy demand, the high-tech industry in particular is turning to nuclear power worldwide; even Japan is planning to expand its nuclear industry despite the disaster 15 years ago. To power their data centers, mega-corporations like Amazon, Meta Platforms, and Nvidia have already announced massive investments in small, modular reactors, known as SMRs.

When trillion-dollar companies invest heavily in nuclear power, it can only mean one thing: the demand for uranium will rise for years and decades to come. No wonder the price of uranium oxide has been trending upward for a decade, despite occasional corrections. The price for a pound of the radioactive material has more than tripled since 2016, rising from USD 27.65 to a recent high of USD 85.15. Although interim highs above USD 100.00 could not be sustained, the long-term upward trend remains unbroken.

YELLOW CAKE: A SOLID BET ON THE URANIUM PRICE

Although retail investors do not have access to uranium trading on commodity exchanges, there are several ways to profit from this trend. First, there is an ETF-like vehicle called the Sprott Physical Uranium ETC, which aims to track the price of uranium oxide on a 1:1 basis. On the other hand, experienced investors often turn to Yellow Cake shares as an alternative. The British company specializes in purchasing uranium oxide, mostly from the Kazakh world market leader Kazatomprom, storing it long-term, and thus profiting from rising uranium prices without assuming mining or operational risks.

The virtually debt-free trading company achieves high returns on equity of over 25% during periods of rising uranium prices. However, it occasionally reports losses when prices for the radioactive metal decline. However, these losses generally do not affect liquidity, as the experienced management team is patient and feels no pressure to sell portions of its uranium reserves at a loss. Only during periods of high demand and reasonable prices is the company, headquartered on the Channel Island of Jersey, willing to sell a portion of its inventory. Based on analyst estimates for the current year, the price-to-earnings (P/E) ratio currently stands between 5 and 6. Consequently, the stock appears very cheap at first glance; however, this ratio is primarily calculated based on book profits, unless there are cash-generating sales, which would theoretically also enable a dividend.

However, no distributions are planned at this time, as the proceeds are to be reinvested in uranium purchases as soon as the price appears favorable again. The key metric for the stock is therefore not the P/E ratio, but the price-to-book (P/B) ratio, which provides insight into the value of the inventory and traditionally hovers around the 1.0 mark. The stock price, therefore, generally moves in tandem with the uranium price. The current price of EUR 6.80 corresponds almost exactly to the book value, which analysts currently estimate at GBP 5.86.

KAZATOMPROM: THE GLOBAL MARKET LEADER FROM THE STEPPE

Shares of Yellow Cake's cooperation partner, Kazatomprom, promise greater momentum. Since mid-2025, the Global Depositary Receipt (GDR)—a type of depositary receipt—of the Kazakh group, which is traded in Germany, has clearly outperformed the uranium price. The current price of EUR 68.00 is just below the all-time high of EUR 74.60 reached a month ago. Over the past year, the price has more than doubled. This aligns with the company's operational performance. With revenue of approximately KZT 1.8 trillion (Kazakh tenge), the company generated a net profit of KZT 570 billion last year. This corresponds to a return on sales of more than 30%. And it gets even better: According to consensus estimates, revenue of more than KZT 2.5 trillion and a profit of nearly KZT 800 billion are projected for 2026. Converted, that would amount to revenues of EUR 4.6 billion with a net profit of just under EUR 1.5 billion. Unlike Yellow Cake, the National Atomic Company Kazatomprom JSC, as the company is fully named, is not stingy with dividends. About two-thirds of the profit is expected to be distributed. This puts the dividend yield well above 5%.

POLITICAL POWDER KEG AS AN ADDITIONAL RISK

That sounds tempting, were it not for the political risks: Kazakhstan is anything but a safe haven due to socioeconomic inequalities, restricted fundamental rights, and geopolitical tensions. Since violent unrest in 2022, triggered in part by high gasoline prices, the situation remains tense. Corruption, a regime that is at least semi-authoritarian, and dependence on Russia are, according to Amnesty International, good reasons to exercise caution. The war in Ukraine is increasing the pressure, as Moscow is also exerting influence here on Russian-speaking minorities in Kazakhstan.

For stock market investors, the risk is compounded by the GDR structure. Due to political sanctions against Moscow, Russian GDRs have not been tradable in Germany for years. Those who were not informed in time and were unable to sell suffered a de facto total loss on shares of Gazprom, Nornickel, and others. While it is unlikely, given the current situation, that a similar debacle could occur with Kazakh stocks, investors should factor in the political risk, especially since 75% of the shares are state-owned. In Kazatomprom's favor, however, is not only the high dividend yield but also the fact that its market capitalization, equivalent to around EUR 18 billion, is not even half that of the largest Western uranium producer, Cameco, even though the Kazakhs sell significantly more uranium, 13 to 14 million tons per year, than their Canadian competitor (8 to 10 million tons). There is therefore no shortage of upside potential.

STALLION URANIUM ON A DISCOVERY JOURNEY

A similarly speculative investment to Kazatomprom is the stock of Stallion Uranium, albeit for entirely different reasons. The company is headquartered in Vancouver and has so far been searching exclusively for uranium deposits in Canada. There are therefore no political risks. However, CEO Matthew Schwab leaves no doubt that by buying the stock, investors are not investing in a producing company, but in a so-called junior explorer that is still in the very early stages of its development. This is reflected in the valuation. With a market capitalization equivalent to EUR 35 million, the company is at the microcap level; the share price has been trading in a range between EUR 0.20 and EUR 0.30 since September 2025, with occasional spikes both up and down. Schwab, in turn, sees the low valuation as an opportunity; otherwise, the experienced geologist, who previously worked for the much larger competitor NexGen Energy, among others, would hardly have switched to a company that, so far, is known at most to industry insiders.

Stallion Uranium's asset is a 1,700 sq km land package in the province of Saskatchewan, located in the north of the country. Specifically, it is situated in the Athabasca Basin, the region with the highest known uranium ore grades in the world. This area accounts for approximately 15.5% of global uranium production. The initial priority is exploration of the Coyote Corridor, located in the immediate vicinity of known deposits that are being mined by, among others, Schwab's former employer, NexGen. Drilling is already underway there in collaboration with the partner company Atha Energy, which is five times larger. The results are more than promising. Among other things, a significant deep gravimetric anomaly has been identified that closely resembles the geophysical signatures of other major discoveries in the region. The structural and geophysical characteristics even match those of NexGen Energy's significant Arrow deposit, which underscores the potential for high-grade uranium mineralization.

MANAGEMENT HAS CONFIDENCE IN ITS OWN COMPANY

In addition, Stallion Uranium has several other irons in the fire. Surveying of the neighboring Stone Island area has already been completed, and data evaluation is underway. Areas with evocative names such as Fox, Lynx, Fishhook, and Five of Diamonds also exhibit conditions that are potentially ideal for uranium deposits. It is no coincidence, then, that management itself holds approximately 45% of Stallion's shares. In addition to Schwab, the executive board includes other top-tier industry experts with years of experience in the mining industry, such as Darren Slugoski, Vice President of Exploration, and Chief Financial Officer Paulo Santos. The latter is likely particularly pleased that he will not have to go door-to-door seeking funding anytime soon. Thanks to a cash balance of CAD 21 million, the exciting exploration journey in the world's most productive uranium mining region is fully funded for the foreseeable future.

Even though it is not yet possible to value the company based on P/E or P/B ratios, Stallion stock has its appeal. A single success announcement could be enough to send the share price of the company with the stallion in its logo galloping away. And the stated goal of the ambitious team is to present at least four promising targets on par with Coyote this spring.