Uranium is an essential source of fuel for nuclear power plants. Nevertheless, spot prices for uranium had remained at less than $50 from 2012 to mid-2021. Uranium prices now seem to be making a comeback, with its spot price rising to a $50.80 nine-year high last September. The rise in spot prices has been driven by increasing demand and massive supply disruptions.
The demand for uranium is expected to rise because major economies, including China, Russia, and India, are constructing new nuclear reactors. In a quest to achieve net-zero carbon emissions, renewed interest in uranium has been fostered worldwide. Major economies like Japan, the United Kingdom, and member nations of the European Union have all announced that utilizing nuclear energy is a part of their climate change programs. In addition, the Biden administration’s $1.2 trillion bipartisan Infrastructure Investment and Jobs Act focuses on a “more equitable clean energy future,” thereby putting nuclear projects back in the spotlight. The World Nuclear Association’s Nuclear Fuel Report indicates a 27% increase in uranium demand during 2021 - 2030. Furthermore, the ongoing Ukraine-Russia crisis is expected to put upward pressure on uranium prices because Ukraine is the ninth-largest uranium producer in the world.
Given this backdrop, we think it could be wise to add uranium stocks Uranium Energy Corp. (UEC) and Ur-Energy Inc. (URG) to one’s watchlist. Wall Street analysts expect these stocks to rally by more than 45% in price in the near term.
Uranium Energy Corp. (UEC)
UEC is a uranium mining and exploration company. The Corpus Christi, Tex.-based company is focused on exploring, pre-extraction, extraction, and processing, with uranium projects located in the United States and Paraguay.
On Dec. 20, 2021, UEC announced that it had acquired all the issued and outstanding Uranium One Americas, Inc. (U1A) shares. President and CEO Amir Adnani said, “We are very pleased to have closed this highly accretive transaction for UEC. The acquisition doubles out production capacity in three key categories: total number of permitted U.S. ISR projects, resources, and processing infrastructure.”
UEC’s total comprehensive loss narrowed 60.6% year-over-year to $1.93 million for the first quarter, ended Oct. 31, 2021. In addition, its net loss narrowed 58.2% year-over-year to $2.07 million. The company’s net loss per share narrowed 66.6% year-over-year to $0.01. Also, its cash, cash equivalents, and restricted cash, came in at $98.34 million, representing a 1,051.5% increase year-over-year.
Analysts expect UEC’s EPS for its fiscal year 2022 to increase 114.3% year-over-year to $0.01. Its revenue for fiscal 2023 is expected to increase 482.8% year-over-year to $25.47 million. And over the past year, the stock has gained 76.4% in price to close the last trading session at $4.25. However, Wall Street analysts expect the stock to hit $7 in the near term, indicating a potential 64.7% upside.
Ur-Energy Inc. (URG)
URG is a Littleton, Colo.-based exploration-stage mining company that acquires, explores for, develops, and produces uranium mineral resources located primarily in Wyoming. The company holds interest in 12 projects located in the United States.
For its fiscal third quarter, ended Sept. 30, 2021, URG’s cost of sales declined 7.4% year-over-year to $1.70 million, while its cost of sales for the nine months ended Sept. 30, 2021, decreased 54.5% year-over-year. The company’s gross loss narrowed 7.9% year-over-year to $1.69 million. Also, its total current assets came in at $36.15 million, representing a 611.5% increase over its fiscal year ending Dec. 31, 2021.
For the quarter ended March 31, 2022, URG’s EPS is expected to increase 75% year-over-year to $0.01. Over the past month, the stock has gained 38.6% in price to close its last trading session at $1.62. However, Wall Street analysts expect the stock to hit $2.37 in the near term, indicating a potential 46.3% upside.
UEC shares were trading at $4.13 per share on Thursday morning, down $0.07 (-1.67%). Year-to-date, UEC has gained 23.28%, versus a -8.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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