Please ensure Javascript is enabled for purposes of website accessibility

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

By Rich Smith – Sep 2, 2021 at 1:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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 MiningReview.com 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
360%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.