What happened
The Monday after Christmas dawned bright for alternative energy stocks, and shares of uranium producers Denison Mines (DNN -0.91%) and Energy Fuels (UUUU 0.54%) are roaring ahead 13.4% and 13.5%, respectively, as of 10:45 a.m. EST.
Meanwhile, China's Daqo New Energy (DQ 0.39%), a producer of polysilicon for the solar industry, is up a respectable 4%.
So what
Let's tackle the more obvious news first.
Daqo announced Wednesday that it has signed a couple of long-term polysilicon supply agreements with local solar panel producers, with something on the order of 55,000 metric tons of polysilicon to be supplied over the next two years. Granted, news from Wednesday seems a bit old to be responsible for a run-up on Monday, but investors in the U.S. haven't been able to trade on the news for several days now, due to first holiday-abbreviated trading hours on the stock market, and then the weekend. Today's rise in Daqo stock therefore appears to be a sort of delayed action response to the news.
Similarly, stock price moves higher at Denison and Energy Fuels appear to signal continued enthusiasm over last week's news that Congress has approved $75 million in funding for the launch of a U.S. strategic uranium reserve, as well as this morning's news that President Donald Trump signed the latest coronavirus relief package into law over the weekend.
Image source: Getty Images.
Now what
In addition to direct buying of uranium from companies like Denison and Energy Fuels, the signing of the stimulus bill promises to pump as much as $11 billion in federal money into the nuclear power industry in general, including by modernizing power plants and researching new types of reactors. That's good news for the uranium producers.
It's also good news for solar industry companies such as Daqo, as the stimulus bill includes $24 billion in government spending on non-nuclear forms of energy, such as solar power. Whether the news is good enough to justify the significant run-ups in stock price, however, will depend on whether the stimulus money suffices to turn Denison and Energy Fuels into profitable companies in 2021, and helps Daqo produce enough profit to make its current 65 P/E ratio seem a little more palatable.
