Company Interview / A minefield of stocks on Richard's radar

Key points:

Common traits in nuclear and lithium stocks include corporate activity and production potential.Pilbara Minerals (ASX: PLS) and Liontown (ASX: LTR) are key lithium producers with growth avenues.The nuclear sector remains high-risk, but opportunities exist with Paladin (ASX: PDN) and Boss Energy (ASX: BOE).

Richard Hemming from Under The Radar observes common traits between nuclear and uranium stocks and lithium stocks. He notes recent corporate activity, such as Rio Tinto's (ASX: RIO) bid for Arcadium (ASX: LTM), as driving momentum. He mentions that although fundamentals are improving, commodity prices remain stable.

Regarding lithium, Richard identifies Pilbara Minerals and Liontown as key players due to their production capabilities and growth potential. He highlights the rapid supply response possible in lithium compared to nuclear energy, where the supply can't quickly adjust to uranium price changes.

In the nuclear sector, Richard sees potential in stocks like Paladin and Boss Energy. He points out Kazakhstan's ability to increase production but notes their likely focus on markets like China or Russia. Richard underscores the high-risk, boom-and-bust nature of these commodities but remains optimistic about the future opportunities.

Full unedited transcript below:

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Let's get some further stock specifics now. Our next guest saying he notices a common traits between nuclear or uranium and lithium stocks. Richard Hemming joining us from under the radar. Richard, welcome. Hi, Andrew. Great to be back. Yeah. Good to have you on the show again. Yeah. Thanks. So, um, of course, lithium has taken off since, uh, Rio's bid for Arcadian. Yeah. What what are you seeing in that space, then? Is that justified? Is the bottom in. Are you a little more optimistic of what you're seeing? Well, you know, our analysts have been spending quite a bit of time on, um, on this, on both sectors, which is what happens when we see opportunities. We tend to, you know, make the analytical wheels turn faster. But what we're seeing, I guess, is like, you know, improving share prices coming off, coming off lows coming off 12 month lows in most cases. And we're seeing fundamentals improving albeit we're not seeing much sort of action at the commodity price level. So I would I

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would say that I guess these are boom and bust commodities, you know, like iron always in this sort of situation. Once upon a time, although hard to remember. Yeah, that seems like early 2000 or something or late, late 90s. So like, I, I myself bought some boss energy at $1.40 and, and you know, and it really transformed my portfolio and then and then obviously my portfolio weakened quite considerably. So it does kind of emphasize that you need to take profits in some of these in some of these stocks. But what you also need to do is recognize opportunities. Well okay. So so what are those common traits you're seeing with uranium and lithium stocks there? I guess that momentum you're seeing in more broadly in the market. Well okay. On on the the main the main trait is I guess that we're seeing

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um, evidence of corporate activity. So the evidence which you just pointed to before is Rio Tinto buying Arcadian. And we can talk more about that. Um, but I guess on the lithium front, we're seeing more important activity, which is that I, you know, and hyperscalers. So hyperscale is led by the demand for AI are bringing them to the to you know, just to conclude that nuclear energy, you know, 24 over seven power is important for their future. I mean, so that's that's lit of flame literally under a lot of these stocks. Um, and I guess so what I would say is that, you know, while we're in this situation, you might see you we think you'll probably see more corporate activity because these guys will not mess around. They will they will go they will go for the jugular. While you know the commodity prices are depressed, if it makes sense for them, which we saw with Rio Tinto. And we're seeing with, you know, locking

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in of agreements with Microsoft and Amazon with big with big power supplies in the US. Yeah. Into the Three Mile Island plants. So just in terms of the lithium stocks, then you're looking to further consolidation. Any potential sort of targets or inquiries, do you think? Well, I think the ones in the in the box position are, um, Pilbara minerals, um, because they're a producer and also I guess, um, line town, because they're a nascent producer, they're ramping up production. And these really stand head and head and shoulders above the rest because like you, you're not seeing, um, other other producers sort of ramping up or increasing production like those two. Plus they've got avenues for growth, they've got avenues for growth down the track, like they've uh, I think Pilbara has made an acquisition in Canada and um,

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uh, line towns got, uh, you know, they've got growth potential as well. So I would say that, you know, I've always said with lithium you're very much in the box seat if you're a producer, because we can see a relatively fast supply response. And in lithium, whereas you can't see that in nuclear, you can't see you can't see the same supply response in nuclear if you see an increase in the uranium price. So would you be happy to own Pilbara alliance? I own I own Pilbara, right. But I would say that mine is much higher risk. Um, of course you've got the the Rinehart factor. Mhm. Um, I would say I prefer Pilbara because I think I exercise more caution on like we heard the gentleman before um talking about China. There's a lot more China risk. Like recently we saw on the lithium front we saw cattle the biggest battery producing in the world. Well, they halted, um, lithium extraction from one

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of their from one of their minds. And like China is very much in the controlling seat as far as lithium is concerned. That's our house view. Whereas and we saw, you know, just what a precarious place China is in, you know, relatively speaking. Whereas I wouldn't we wouldn't conclude that kind of precarious place is, is there with the nuclear stocks. All right. Well, so given the nuclear stocks, the uranium. So you said given the nuclear producers or. Yeah, you own boss,

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uh, you're holding that. And what else would you be looking at then? Well, we like Paladin. We like Lotus Resources is at the higher risk end of that. But like, I guess the point intro is if if the uranium price does rise. Well, Kazakhstan, they can ramp up production. Who are they going to sell to? Probably China or Russia, not the West. Kanako. They can increase production, but there's no no supplies actually increasing production. Um, outside of Paladin and Boss energy. So that's where the excitement, that's where the excitement is for me particularly, you know, being a being a shareholder always helps you, you know, garner interest in this talk. You're a little more motivated, aren't you, to get it right. Definitely more motivated on the upside. And the downside is, is everyone watching? Well, no. And that's why it's so good to hear different viewpoints because, you know, there's always a there's always different viewpoints. But I would emphasize that the start, you know, these are boom

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bust commodities. They're very high risk because we're seeing these these kind of industries that are relying on the commodities at that early in this stage of the life cycle. And we saw a lot of the investment banks jumping in to try and get a part of the action. Recently in a conference where they were saying, yep, we're going to fund these nuclear capacity. So so we're starting to see more, um, more encouraging signs for nuclear energy. Definitely. As you know, as the carbon or the energy transition occurs, there's only so many places you can go for baseload. I mean, it's just it's just obvious. I mean, to me, being a shareholder.