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Why All the Uranium Stocks Crashed Today

By Rich Smith – Sep 17, 2021 at 3:57PM

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Investors may be looking ahead to an end of the supply crunch.

What happened

After enjoying a nice run-up earlier in the week, uranium stocks melted down on Friday. As of 3:30 p.m. EDT, shares of uranium mining company Energy Fuels (UUUU -2.16%) are down 10%, NexGen Energy (NXE -3.27%) is off 10.2%, and Uranium Energy (UEC -3.74%) is suffering worst of all -- down 12.1%.

The funny thing is, there doesn't appear to be an obvious reason for the sell-off.

Three arrows trending down over a background of a map and dollar signs.

Image source: Getty Images.

So what

To the contrary, this morning shares of two of the bigger names in uranium mining, Denison Mines (DNN -1.70%) and Cameco (CCJ -1.93%), both got a lift from Wall Street when investment bank Raymond James assigned higher price targets to each: C$2.40 for Denison and C$34 for Cameco.  

That should have been good news for peer uranium stocks like Energy Fuels, NexGen, and Uranium Energy -- but apparently wasn't.

At the same time, spot prices for actual uranium yellowcake, used in the production of nuclear fuel and mined by these companies, just hit their highest levels in nearly a decade, closing at $49.65 a pound last night.  

Now what

Call me a surprised skeptic, but if uranium prices keep rising like they've been rising, it won't be too much longer before uranium reaches the magical price level of $60 a pound, which according to MiningReview.com is the price necessary to make uranium mining sufficiently profitable that miners will begin reopening shuttered mines, and investing to increase production and capitalize upon the more attractive prices.

In any ordinary world, you'd think that would be good news for uranium mining stocks, and a reason for their shares to go up today, not down. Then again, if uranium miners start producing more, then fears of the very same supply crunch that has been propelling prices higher these past few weeks could very well be eased -- sending prices right back down again. Such is the nature of investing in cyclical industries like mining... and energy... and mining for energy.

Don't say you weren't warned.

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

Energy Fuels Stock Quote
Energy Fuels
UUUU
$6.79 (-2.16%) $0.15
Cameco Stock Quote
Cameco
CCJ
$23.91 (-1.93%) $0.47
Uranium Energy Stock Quote
Uranium Energy
UEC
$3.73 (-3.74%) $0.14
Denison Mines Stock Quote
Denison Mines
DNN
$1.20 (-1.70%) $0.02
Nexgen Energy Ltd. Stock Quote
Nexgen Energy Ltd.
NXE
$4.58 (-3.27%) $0.15

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

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