VanEck Uranium And Nuclear ETF: I Don't Like The Composition

seekingalpha11-22 18:10

During the 28th COP28 Summit, something remarkable happened: Twenty countries have decided to triple their nuclear power production by 2050.The ETF has a high concentration in utilities and lacks ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2485230494?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1556635801/image_1556635801.jpg","is_english":true,"pubTime":"2024-11-22 18:10","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2485230494","market":"hk","top_or_hot":-1,"title":"VanEck Uranium And Nuclear ETF: I Don't Like The Composition","media":"seekingalpha","content":"<div>\n<p>During the 28th COP28 Summit, something remarkable happened: Twenty countries have decided to triple their nuclear power production by 2050.The ETF has a high concentration in utilities and lacks ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739534-vaneck-uranium-nuclear-etf-i-dont-like-composition\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>VanEck Uranium And Nuclear ETF: I Don't Like The Composition</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nVanEck Uranium And Nuclear ETF: I Don't Like The Composition\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-22 18:10 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739534-vaneck-uranium-nuclear-etf-i-dont-like-composition><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>During the 28th COP28 Summit, something remarkable happened: Twenty countries have decided to triple their nuclear power production by 2050.The ETF has a high concentration in utilities and lacks ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739534-vaneck-uranium-nuclear-etf-i-dont-like-composition\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NLR","symbol_name":"核能指数ETF-Market Vectors","start_time":0,"source_url":"https://seekingalpha.com/article/4739534-vaneck-uranium-nuclear-etf-i-dont-like-composition","article_id":"2485230494","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1556635801/image_1556635801.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485230494","pubTimestamp":1732270219,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"During the 28th COP28 Summit, something remarkable happened: Twenty countries have decided to triple their nuclear power production by 2050.The ETF has a high concentration in utilities and lacks sign","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NLR":"核能指数ETF-Market Vectors"},"translate_title":"VanEck铀和核ETF：我不喜欢它的成分","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NLR":0.9},"content_text":"During the 28th COP28 Summit, something remarkable happened: Twenty countries have decided to triple their nuclear power production by 2050.The ETF has a high concentration in utilities and lacks significant positions in key uranium miners, reducing its appeal for uranium price gains.I prefer the Sprott Physical Uranium Trust for direct exposure to uranium prices, avoiding the ETF's issues with valuation.Ole_CNX  Investment Thesis The VanEck Uranium and Nuclear ETF (NYSEARCA:NLR) offers an opportunity to benefit from rising Uranium prices and the growing demand for CO2-free electricity to reach the global net-zero targets. Uranium is a great complementary, stabilizing, and secure energy source when wind and solar are weak. While uranium has a bright future, I think there are better ways to invest in this energy source. This article explains why I am not enthusiastic about this ETF. Focus on Uranium During the 28th Conference on the World Climate Action Summit (COP28), something remarkable happened: Twenty countries have decided to triple their nuclear power production by 2050 and declared that Uranium will play an essential role in the fight against climate change.  The Declaration recognizes the key role of nuclear energy in achieving global net-zero greenhouse gas emissions by 2050 and keeping the 1.5-degree goal within reach. Core elements of the declaration include working together to advance a goal of tripling nuclear energy capacity globally by 2050 and inviting shareholders of international financial institutions to encourage the inclusion of nuclear energy in energy lending policies. energy.gov  Overall, the energy market is undergoing a tremendous upheaval that will last for decades, and we certainly do not yet know precisely what the energy mix will look like at the end of the century. Uranium seems essential because it has several advantages: low cost, relatively safe (in terms of the number of deaths it caused), and low CO2 emissions. Renewable energies such as wind and solar power have made significant progress but face challenges such as intermittency and limited storage options. These disadvantages are compensated by uranium as a secure base load energy source. In addition, nuclear energy has also developed technologically, for example, through small modular reactors that can be flexibly deployed and expanded. At the same time, however, the industry has been in a structural deficit for many years, as large stocks from the 1980s to 2000s still existed from dismantling nuclear missiles.  Uranium was among the best-performing assets in 2023, and for good reason. Uranium may likely be in a long-term supply deficit, with a cumulative undersupply of approximately 1.5 billion pounds expected through 2040. At the same time, Cameco, a leading producer of uranium, cut production estimates at its Cigar Lake and McArthur River/Key Lake sites, reducing supply from an already uranium-starved market. A few other developments in December are adding more fuel to the fire for uranium and the energy transition. nasdaq.com: COP 28, Uranium, and the Energy Transition  ETF Overview This ETF was issued in 2007 and tracks the MVIS Global Uranium & Nuclear Energy Index (full replication technique). Its yearly expense ratio is 0.61%, with $644M in assets under management. Currently, the ETF contains 27 stocks; you can see the complete list here, with the top ten representing about 59%; these are:  Constellation Energy Corp - 7.79% Cameco Corp - 7.19% Public Service Enterprise Group Inc - 6.89% BWX Technologies Inc - 6.21% PG&E Corp - 5.93% Uranium Energy Corp - 5.69% NuScale Power Corp Class A - 5.39% Denison Mines Corp - 4.98% NexGen Energy Ltd - 4.97% Fortum Oyj - 4.12%  The top sector in the ETF is Energy, with 45%, followed by Utilities at 40%, Industrials at 14%, and a small allocation to Technology at 2%. So, the ETF has a surprisingly high allocation in Utilities, which is also underpinned by the ETF description on Seeking Alpha.  The fund invests in public equity markets of global region. The fund invests in stocks of companies operating across energy, oil, gas and consumable fuels, coal and consumable fuels, uranium ores, utilities, electric power generation by nuclear fuels sectors. The fund invests in growth and value stocks of companies across diversified market capitalization. Description of Seeking Alpha  The ETF's country allocation is fairly heavily concentrated in North America. An additional 10% is allocated to Australia, so the three most important countries together account for 77%. vaneck.com Dividend growth NLR offers an annual dividend yield of 3.53% and a forward dividend payout of $3.26 per share (ex-dividend date: December 18th). The five-year CAGR yearly growth rate for dividends is 11%, but payments have grown consistently for only two years. Going forward, this industry is obviously not one that can offer steady dividend increases but is and will be highly dependent on uranium prices. However, the dividend yield is reasonable compared to other oil and gas ETFs. Data by YCharts Performance & Valuation Since its launch in 2007, the ETF has delivered a disastrous performance overall. vaneck.com However, this trend has reversed since 2020, and uranium has even outperformed the broad market. On the Seeking Alpha Momentum page, we see that on a 5-year horizon, NLR is ahead of the S&P500. Seeking Alpha In some cases, the ETF issuer gives us an average P/E ratio of all included companies. Unfortunately, VanEck does not. However, I can quickly look up the forward P/E ratio of the top 10 positions. As you can see, only two companies are relatively cheaply valued, and four have little or no revenue.   Constellation Energy Corp. 28   Cameco Corp. 141   Public Service Enterprise Group Inc. 25   BWX Technologies Inc. 40   PG&E Corp. 15   Uranium Energy /   NuScale Power Corp. Class A no sales   Denison Mines Corp. negative (only $6M sales)   NexGen Energy Ltd. (only $2M sales)   Fortum Oyj 10.6   Click to enlarge Risks In my view, the main risk with this ETF is regulatory uncertainty surrounding nuclear power usage worldwide-many regions still face public resistance or slow adoption rates due to safety concerns post-Fukushima. However, this risk seems much lower now after the declarations of the COP28 event. ETF-specific risks lie in the portfolio composition, as 59% are concentrated just within ten stocks-a significant concentration risk if a few stocks underperform or face headwinds like operational disruptions within their sector/region. If this is too much of a cluster risk for you, you should switch to other ETFs or buy several ones. For example, one for uranium, another for energy in general, another for oil and gas, and then you can weigh them as you wish. That's how I handle my ETF investments (and, of course, I own not only ETFs from the Energy sector). What I don't like about the ETF These are not risks but my personal aversions to this ETF. I don't like the concentration of 40% in the utilities sector. When buying an ETF called \"Uranium And Nuclear ETF,\" I want to invest mainly in miners or companies relatively far down the value chain. The top position in the ETF, Constellation Energy Corporation, operates nuclear power plants but is not a miner. As an investor, you must be clear about what you want to invest in. The problem is that when the price of uranium rises, it is mainly the miners who benefit, while nuclear power plant operators do not; on the contrary, they actually pay more. Ok, in reality, it's a bit more complicated because there are usually long-term supply contracts that are either fixed in pricing or are based on the spot price but do not fully reflect these fluctuations. However, the basic idea is still accurate: miners are more likely to benefit from rising uranium prices. Another thing I don't like becomes apparent when looking at a Statista chart of the \"Leading uranium mining companies worldwide based on production output in 2022.\" The biggest company, Kazatomprom, is not included among the top 10 in this ETF. Looking at the complete holdings list on the VanEck website, I found it to rank 13th with 3.73%. In my opinion, that is weird: the world's leading producer is not even in the top 10. The 2nd biggest producer, Cameco (CCJ), is also 2nd in this ETF. Statista Instead, NuScale is the 7th largest holding; I covered it just a few days ago and called it hyped but lacking substance. This is a company I would not want to invest in. However, this dilemma happens in any ETF; you always get some stocks you wouldn't want to own, but they are included in the complete package. Conclusion Overall, I don't like the composition of the ETF, with several companies in the top 10 that have little or no revenue (in the case of NuScale, for example, revenue is still years away). That in itself is not necessarily a red flag, but it's not what I would like to see. Almost all other companies in the top 10 are already highly valued. It looks like the uranium sector's outperformance in recent years is also due to an increase in the average P/E ratio. If you believe in rising uranium prices, there are other ways to potentially profit from this. For example, I'm invested in the Sprott Physical Uranium Trust (OTCPK:SRUUF), where physical uranium is bought and stored so that the share price closely follows the development of the uranium price. Overall, I rate the ETF as a sell because I would sell it and organize my uranium investment differently if I owned it.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485230494"}