With rising global demand for nuclear energy and increasing nuclear reactor capacity, uranium is witnessing a surge in demand. Furthermore, the resumption of production and rising demand have resulted in an optimistic prognosis for the industry’s growth prospects, leading August’s total spot market volume to 13.2 million pounds, the highest monthly volume in the uranium spot market since 1996.
The surging demand for and dependency on nuclear energy, growing awareness for decarbonization, oil price fluctuations, and the economic advantage of uranium production are projected to drive the industry’s growth. The global uranium market is expected to reach 92.3kt by 2027, registering a CAGR of 2%.
Given this backdrop, Wall Street Analysts expect uranium stocks Energy Fuels Inc. (UUUU), Uranium Energy Corp. (UEC), and Ur-Energy Inc. (URG) to rally by more than 30% in the upcoming months.
Energy Fuels Inc. (UUUU)
UUUU engages in the extraction, recovery, exploration, and sale of conventional and in situ uranium recovery in the United States. In addition, the company owns and operates the Nichols Ranch project, the Jane Dough property, the Hank project located in Wyoming, the Alta Mesa project located in Texas, and White Mesa Mill in Utah.
In July, UUUU entered into a Strategic Alliance Agreement with RadTran, LLC to explore the recovery of thorium and radium from the company’s existing rare earth carbonate and uranium process streams for use in medical isotope manufacturing for new targeted alpha therapy cancer therapeutics. This endeavor will supplement UUUU’s existing uranium and RE Carbonate operations by investigating the recovery of isotopes in existing process streams for medical uses at its White Mesa Mill in Utah.
UUUU’s revenue increased 15.4% year-over-year to $456 thousand in the second quarter that ended June 30, 2021. Its cash and cash equivalents grew 196.7% from the year-ago value to $79.02 million. Its gross profit came in at $456 thousand for this period, compared to a gross loss of $33 thousand in the first quarter of 2020.
UUUU’s EPS is expected to increase 30.4% in the current year. The consensus revenue estimate of $6.67 million for fiscal 2021 represents a 302.3% increase from the same period last year. The stock has gained 243.6% over the past year and 178.3% over the past nine months.
Two Wall Street analysts that have provided ratings for the stock, rated it Buy. Closing Friday’s trading session at $6.15, the average analyst price target of $8 represents a potential 30.1% upside.
Uranium Energy Corp. (UEC)
UEC is engaged in uranium and titanium concentrate exploration, pre-extraction, extraction, and processing in the United States, Canada, and Paraguay. It owns interests in the Palangana mine, Goliad, Burke Hollow, Longhorn, and Salvo projects in Texas; the Anderson, Workman Creek, and Los Cuatros projects in Arizona; and several other projects.
In May, the company acquired an additional 200,000 pounds of U.S. warehoused uranium. Its physical uranium initiative is fully funded with cash on hand. It now includes 2.305 million pounds of US-stored uranium at a volume-weighted average price of $30 per pound with delivery dates out to June 2023.
In the third quarter that ended April 30, 2021, UEC’s cash and cash equivalents increased 528.6% year-over-year to $44 million. Its interest income came in at $16 million over this period. In addition, for the nine months that ended April 30, 2021, the company’s net cash from financing activities grew significantly from the year-ago value to $78.5 billion.
The company’s EPS is expected to grow 25% in the current year. In addition, analysts expect UEC’s revenue to increase 676.6% year-over-year to $23.13 million in fiscal 2022. The stock has gained 173.4% over the past year and 170.9% over the past nine months.
The only analyst that provided a rating for the stock, rated it Buy. The consensus price target of $5 represents a 67.8% potential gain from its last closing price of $2.98.
Ur-Energy Inc. (URG)
URG acquires, explores, develops, and operates uranium resource deposits. Its flagship property is the Lost Creek project comprising approximately 1,800 unpatented mining claims and three Wyoming mineral leases covering an area of about 36,000 acres located in the Great Divide Basin, Wyoming.
During the second quarter that ended June 30, 2021, URG’s revenue came in at $7 thousand. Its cash and cash equivalents grew 266.7% from the year-ago value to $21.5 million.
URG is expected to witness revenue growth of 326% year-over-year to $47.5 million next year. Its EPS is estimated to increase 55.6% in the current year. URG’s stock has gained 161.6% over the past year and 84.7% so far this year.
The only Wall Street analyst providing a rating for the stock rated it a Buy. Currently trading at $1.48, the average analyst price target of $2.1 represents a 41.9% potential upside.
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UUUU shares were trading at $6.52 per share on Tuesday morning, up $0.37 (+6.02%). Year-to-date, UUUU has gained 53.05%, versus a 21.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...
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