We recently published a list of the 10 Best Canadian Stocks to Buy Under $10. In this article, we are going to take a look at why Denison Mines Corp. (NYSE:DNN) is one of the best Canadian stocks to buy under $10.
How are Canadian Stocks Performing?
The Canadian stock market had a positive third quarter, following a sluggish start earlier in 2024. The market was driven by domestic rate cuts and rebounding global markets. The BMO S&P 500 Index ETF, iShares Core S&P/TSX Capped Composite Index ETF, and iShares S&P/TSX 60 Index ET have surged over 33%, 20%, and 22% year-to-date, as of November 27.
If we talk about year-over-year headline inflation, it has cooled as per the Bank of Canada’s target rate of 2%. Hence, policymakers have cut rates four times consecutively and another 50 basis points cut is expected in December. The Bank of Canada’s benchmark lending rate stands at 3.75%, while economists are projecting a terminal interest rate of as low as 2%.
The managing director and head of macro strategy at Desjardins Group pointed out that the GST tax break from December 14 to February 15, 2025, will have a high fiscal multiplier, adding a noticeable boost to growth in the first half of 2025. The tax break is to increase consumer spending which has been severely impacted by interest rate increases and high debt levels since 2022. The tax break will allow consumers to buy essentials such as groceries, snacks, and kids’ clothing – all tax-free.
In the long run, the potential trade tariffs pose a wider threat to companies. The newly elected U.S. President Trump has vowed to impose a 25% tax on imports from Canada as well as Mexico. In 2023, the U.S. accounted for more than 75% of exports from Canada.
Canada’s Precious Metal and Mining Industry: The Real Deal
Some of the largest Canadian companies are involved in minerals and mining of rare earth metals, mainly engaged in gold and uranium exploration. Canada is also one of the largest producers of rare earth metals including Gold and Uranium. According to the World Gold Council, Canada was the fourth largest producer of gold with a total production of 192 tonnes in 2023. Are you interested in Gold Stocks to Buy Under $30? (Click Here)
In addition, Canada was the second largest Uranium producer in 2022, accounting for a total production of 7,351 tonnes, as per the World Nuclear Association. Cigar Lake was the largest operational highest-grade Uranium mine in northern Saskatchewan, Canada.
With that, let’s take a look at where Denison Mines Corp. (NYSE:DNN) ranks among the best Canadian stocks to buy under $10.
Why Denison Mines Corp. (NYSE:DNN) is the Best Canadian Stock to Buy Under $10?
A close-up of a uranium mining site, the hardworking miners working underground to extract uranium resources.
Denison Mines Corp. (NYSE:DNN) is a uranium exploration and development company with its main operations in the Athabasca Basin region of northern Saskatchewan, Canada. The company holds a 95% interest in the Wheeler River Project, which is its flagship uranium project. Denison Mines also owns a 22.5% ownership interest in the McClean Lake joint venture, which operates several uranium deposits and the McClean Lake uranium mill. The McClean Lake Mill has an annual licensed production capacity of 24 million pounds of uranium annually.
Denison Mines Corp. (NYSE:DNN) has innovative in-situ recovery (ISR) mining techniques, allowing the firm to reduce environmental impact while ensuring efficient uranium extraction. The company’s In Situ Leach (ISL) method is one of the cost-effective methods of uranium mining. This mining method involves dissolving the uranium minerals in place without physically removing the ore from the ground, thus minimising its cost.
Denison Mines Corp. (NYSE:DNN) is one of the largest Uranium mining companies in Canada. The U.S.’s highest uranium import was from Canada in 2023. Moreover, the U.S. has banned uranium imports from Russia, which makes the U.S. find an alternate route for uranium supply. This could be a catalyst for Denison Mines in the coming quarters, however, potential trade tariffs can be a threat to exports.
In addition, Denison Mines is creating three uranium exploration joint ventures with Cosa Resources in the eastern part of the Athabasca Basin, northern Saskatchewan. Denison Mines Corp. (NYSE:DNN) will maintain a minimum 30% direct interest in the properties and become Cosa’s largest shareholder. In Q3, DNN was held by 23 hedge funds with stakes worth $88.09 million. Point72 Asset Management is the largest shareholder in the company with a stake worth $17.58 million.
Overall, DNN ranks 7th on our list of the best Canadian stocks to buy under $10. While we acknowledge the potential of DNN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DNN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
