Which ASX uranium stock is the smarter buy: Nexgen Energy or Paladin Energy?

Uranium is back in the global energy mix and ASX uranium stocks certainly have taken advantage.

Over the past 12 months, Paladin Energy Ltd (ASX: PDN) and Nexgen Energy Ltd (ASX: NXG) shares have surged 77% and 89% respectively.

Investors are once again asking: which ASX uranium stock offers the most upside from here?

Paladin Energy

This ASX uranium stock is the here-and-now story. The company has restarted its Langer Heinrich mine in Namibia and is ramping production into a strengthening price environment.

On Friday the ASX uranium stock confirmed in a release that it has received Ministerial approval for its Environmental Impact Statement (EIS) for the PLS Project in Saskatchewan, Canada.

The EIS approval is required before the company can secure provincial permits and licences needed for construction and operation. Management of the ASX uranium stock described the decision as an important step forward for the project.

That matters. Paladin is not pitching a feasibility study or a distant dream. It is shipping pounds into a tightening market. If uranium prices stay elevated or push higher, revenue flows directly through the business. Operating leverage is real and immediate.

There is risk, of course. Ramp-ups can disappoint, operational hiccups can sting, and uranium prices remain volatile. Paladin has also carried a complicated history of capital raises and strategic shifts.

But for investors who want exposure to uranium’s resurgence without waiting years for first production, Paladin offers torque today.

Bell Potter has just retained their buy rating. The broker has a 12-month price target of $15.30 on this ASX uranium stock, which suggest a 10% upside from current levels.

The team at Bell Potter was pleased with Paladin Energy’s half-year result, highlighting that revenue and costs were slightly better than expected. 

Nexgen Energy

This $11 billion ASX uranium stock sits at the opposite end of the spectrum. Its Rook I project in Canada’s Athabasca Basin is widely regarded as one of the most exciting undeveloped uranium deposits in the world.

The grades are exceptional. The scale is enormous. On paper, it could become a globally significant supplier. But it is still a development story. Permitting, financing and construction must all fall into place before production begins, and that is a multi-year journey.

That long runway cuts both ways. If uranium demand explodes and long-term contract prices keep climbing, Nexgen’s asset could be worth dramatically more by the time it enters production.

Investors today are effectively buying future optionality on a structurally tighter uranium market. But they are also accepting timeline risk, regulatory risk and the ever-present challenge of funding a large-scale build in a cyclical industry.

Bell Potter has a buy rating on this ASX mining stock. Last month, the broker raised its 12-month share price target for Nexgen to $19.30.

This suggests a near 10% potential upside at the time of writing.

Foolish Takeaway

Uranium’s momentum is building. The right pick comes down to your time horizon and appetite for risk.

If you expect uranium prices to stay firm in the near term and want direct leverage to cash flow, Paladin stands out.

If you’re backing a decade-long nuclear resurgence and can stomach volatility and delays, Nexgen offers higher risk — and potentially higher reward.

The post Which ASX uranium stock is the smarter buy: Nexgen Energy or Paladin Energy? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Paladin share price jumps after major Canadian project approval
• Paladin share price on ice pending major announcement
• Here are the top 10 ASX 200 shares today
• These two uranium stocks are worth a look, this broker says

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.