The price of uranium rose steadily from $7.10 U.S. a pound in December 2000 to as high as $138 U.S. a pound in June 2007.

Prices have since moved down from that speculative high, to today’s price of about $42.50 a pound. But conditions look favourable for higher long-term demand. This would push up the value of a number of uranium stocks (including one that subscribers to Stock Pickers Digest know very well. Read on for further details.)

Risks and rewards of investing in uranium stocks

Industry forecasters now believe uranium demand will exceed supply by 2014. That’s because China, India and Russia are increasing their nuclear-power use as they switch from power plants that run on coal and oil. In North America, concerns about climate change and the U.S. focus on energy independence could fuel the nuclear industry, including some uranium stocks.

In addition, 48 nuclear-power plants are now under construction worldwide. That’s up from 34 in 2008 and 32 in 2007.

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While these factors look promising, investing in uranium stocks does entail some unique risks. With any mine, for example, there is a long lead time from exploration and discovery to production. That’s especially so with uranium, which needs extra regulatory approval because of its radioactivity.

A uranium stock that stands to profit from the trend toward nuclear power

We recently updated subscribers to Stock Pickers Digest, our newsletter that focuses on aggressive investments, on the world’s largest uranium producer, Cameco Corp. (Toronto symbol CCO).

What stands out about Cameco is this uranium stock’s diverse operations: Aside from its dominance in uranium production, Cameco has a 31.6% interest in Ontario’s Bruce Power partnership. This venture operates four of eight reactors at North America’s largest nuclear power complex. Cameco is the exclusive uranium supplier for all eight reactors.

These power-generation assets give the company a solid revenue stream. It also has a strong balance sheet that will let it continue to expand in the uranium-mining and power-generation industries.

Like other commodity investments, uranium stocks like Cameco can be volatile, so we’ll continue to keep a close eye on it in our Stock Pickers Digest newsletter and Hotlines.