Please ensure Javascript is enabled for purposes of website accessibility

Why All the Uranium Stocks Crashed Today

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

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

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 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.

Invest Smarter with The Motley Fool

Join Nearly 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

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

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2022.

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.