EnergySolutions Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of nuclear service provider EnergySolutions (NYSE: ES  ) jumped 13% on speculation the company will gain business from Japan's nuclear crisis.

So what: Today actually started with a slight dip, but when EnergySolutions was mentioned on CNBC's Fast Money Halftime Report, traders went crazy. As a result, volume is nearly five times the three-month average, with much of it centered on 1:00 p.m. Eastern time.

Now what: EnergySolutions has actually been falling since the nuclear issues began in Japan, and as much as I hate to say it (closing my eyes), I agree with Fast Money. At the very least, the sell-off seemed overdone based on possible contract wins in the short term. With all of that said, I am hesitant to buy this move today. Traders came in fast, and they may leave just as quickly after the pop.

Interested in more info on EnergySolutions? Add it to your watchlist.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Fool owns shares of EnergySolutions.  Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (10) | Recommend This Article (5)

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  • Report this Comment On March 16, 2011, at 10:00 AM, Bman409 wrote:

    The problem with this theory is that ES doesn't operate in Asia and its illegal to import radioactive waste in to the US. So I really can't think of a scenario where ES is going to get any sort of business from the Japan tragedy

  • Report this Comment On March 16, 2011, at 10:45 AM, kidchicago2 wrote:

    ES actually does operate in China - they have signed two contracts there in the last year. But you're right that they are not in Japan, yet.

    It is also not illegal in import waste, but you do need NRC approval. ES has applied for a permit to import waste from Germany; time will tell.

  • Report this Comment On March 16, 2011, at 10:53 AM, MKantzler wrote:

    Actually, the pop in ES has its basis in something more foundational than the mention on CNBC's report, because it was already up more than a dollar on the day well before the TV mention, jumping from $5.80. Maybe it was the analyst buying ahead of the broadcast? Portions of the pop were quite rapid, 10-cent jumps within a few minutes, seemingly indicating large orders against what the book showed were small blocks of mostly 100 to 200 shares sold. A lot of shares are out there that sold yesterday above $6.75, up to $7.01, not likely to be selling today for less.

  • Report this Comment On March 16, 2011, at 10:54 AM, agster07 wrote:

    First off, ES does operate in Asia. Helping Japan clean up is not about importing radioactie waste into the US. ES will help clean up and package the radioactive waste and then it will be disposed of by the Japanese.

  • Report this Comment On March 16, 2011, at 11:03 AM, MKantzler wrote:

    P.S. A more substantial reason for the pop in ES may be that the nuclear emergency in Japan, and the threat it poses to the prior acceptance of jumping back into nuclear in the U.S., may result in its only competition, still mired in a grueling and expensive regulatory-approval process before it can begin to think about being in the market, to just drop out, leaving ES with its effective monopoly on waste storage. If the plans for future reactors in the U.S. is substantially cut or delayed, the costs of getting the approvals to get in and compete against ES would not be recouped. There's just not enough business without the expansion, to make a living in storage, especially given ES's exclusive contracts, and its diversity with its other operations in clean-up and international.

  • Report this Comment On March 16, 2011, at 11:12 AM, MKantzler wrote:

    P.P.S. But I really like the ES dividend, combined with the fact it's not going anywhere, competition or not.

  • Report this Comment On March 16, 2011, at 11:24 AM, MKantzler wrote:

    P.P.P.S. Another interesting thing is that even if the U.S. closed all its reactors, which it won't, ES would have even more work, with the clean-up and storage closings require, and, a decade or two after it finished with all the closed plants, it would still be left with its research-reactor clients and international work.

  • Report this Comment On March 16, 2011, at 1:21 PM, Bman409 wrote:

    Technically, I don't believe the company is doing any work at all, anywhere in Asia. It does appear they have contracts for FUTURE work in China, once China finishes building new reactors. China put its nuclear program on HOLD today, however, pending safety reviews

  • Report this Comment On March 16, 2011, at 2:11 PM, Bman409 wrote:

    Stealthy, regarding the dividend, it was discontinued in Sept of 2010.. see Sept 28, 2010 news release

  • Report this Comment On March 16, 2011, at 3:21 PM, MKantzler wrote:

    Thank you Yahoo. They still show a 10-cent div. Just sold my holding. W/O divident, it's too risky, especially since they're restricted to LLNW only.

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