Uranium investors wise to watch Japan

Reports suggesting all of Japan’s 54 nuclear reactors may be forced to close by April 2012 as a result of safety concerns has sent uranium stocks tumbling in recent days.

The four TSX-listed producers – Cameco Corp., Denison Mines Corp., Paladin Energy Ltd. and Uranium One Inc. – have fallen anywhere from 6.05% to 15.69%.

Despite the recent declines and further weakness since Japan’s nuclear crisis began in mid-March, investors looking for value might be wise to wait.

RBC Capital Markets analyst Adam Schatzker is telling clients that valuations may fall lower in the coming months.

“We continue to believe that the sentiment toward to uranium equities will be driven by the news flow from Japan (and other countries’ response to Japan’s nuclear crisis, such as Germany),” he said in a research note.

Mr. Schatzker considers it impossible to determine whether Japanese regulators will follow through with the shutdowns, which the Trade Ministry estimates will add $30-billion to $38-billion to Japan’s energy bill.

The analyst also doesn’t think these shutdowns would be permanent, instead providing time to carry out more thorough safety inspections and make changes to facilities.