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Why Energy Fuels, Uranium Energy, and Ur-Energy Stocks Just Popped

By Rich Smith – Sep 2, 2021 at 1:18PM

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Positive commentary from GLJ lights a fire under uranium stocks.

What happened

Shares of uranium mining companies are red-hot Thursday. As of 12:40 p.m. EDT, both Energy Fuels (UUUU -1.02%) and Uranium Energy (UEC -0.77%) stocks are up 6.9% apiece, while Ur-Energy (URG -3.05%) is leading the pack higher with a 9.1% gain.

And you can probably thank GLJ Research for all of that.

Illustration of two nuclear reactors generating steam.

Image source: Getty Images.

So what

In a short note posted on Twitter yesterday, you see, GLJ raised its price target on yet another uranium mining company. The analyst's positive comments (and 38 Canadian dollar price target) on uranium miner Cameco (CCJ) nonetheless seems to have gotten a lot of investors excited throughout the uranium sector.

GLJ cited the creation of the Sprott Physical Uranium Trust -- a commodity fund that buys and holds physical uranium as an "alternative for investors," and indeed "the world's largest" such fund -- as its reason for optimism. As the analyst explained, Sprott's "aggressive purchasing strategy" of physical uranium creates "potentially massive" upside for uranium mining stocks.  

Now what

How massive are we talking here? According to GLJ, the spot price of uranium could conceivably be pushed up to "a level not seen since January of 2016" by Sprott's buying activity.

Uranium Spot Price Chart

Uranium Spot Price data by YCharts.

But here's the thing: Even if GLJ is right about that, well, as you can see up above, uranium spot prices in January 2016 averaged only about $35 a pound. But as pointed out back in June, it would take prices of $60 a pound to "incentivize" uranium miners to dig up more of the stuff than they're already doing -- or put another way, to make mining uranium profitable enough to be worth the trouble.

Conclusion: January 2016 prices may not be good enough to save the uranium miners -- and today's jump in share prices at Energy Fuels, Uranium Energy, Ur-Energy, and yes, Cameco, too, look like an overreaction.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

UR-Energy Stock Quote
$1.27 (-3.05%) $0.04
Cameco Stock Quote
$24.20 (%)
Uranium Energy Stock Quote
Uranium Energy
$3.85 (-0.77%) $0.03
Energy Fuels Stock Quote
Energy Fuels
$6.81 (-1.02%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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