U-Energy (URG +4.69%) stock jumped 5.1% through 12:25 p.m. ET Tuesday after RBC Capital analyst Andrew Wong initiated coverage of the Littleton, Colo.-based uranium miner with an outperform rating and a $1.75 per share price target.
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Why RBC loves Ur-Energy
Wong is optimistic about the resurgence in nuclear power use in the U.S. — and arguably even more optimistic about the rising need for reliable sources of uranium to fuel it. As a U.S.-based uranium producer, Ur-Energy offers a pure-play opportunity to bet on both.
Ur-Energy operates a “capital-efficient, hub-and-spoke” business model, says the analyst, and benefits from growing U.S. government support for domestic uranium production (so we don’t have to buy so much uranium from Russia, with whom we’re currently not on such friendly terms).
Today’s Change
(4.69%) $0.06
Current Price
$1.34
Key Data Points
Market Cap
Day’s Range
$1.30 – $1.37
52wk Range
$1.12 – $2.35
Volume
142.3K
Avg Vol
11.6M
Gross Margin
-20312.16%
What this means for Ur-Energy stock
Rising demand and limited supply — that could be further limited as the U.S. government curtails uranium imports from Russia? The law of supply and demand suggests this will lead to higher uranium prices in the future and big profits for Ur-Energy.
And prices are moving higher, with uranium fetching $85 per pound on the spot market currently (up from $32.25 five years ago) and purchasers paying even more to secure long-term supply contracts — as much as $95.50 per pound.
Short-term price trends are more ambiguous, with uranium spot prices basically treading water the past three months. But given the insatiable demand for power to run artificial intelligence data centers, the buy thesis for uranium looks intact. The real question for investors is whether Ur-Energy can capitalize on this trend and turn profitable again after eight years of losses.
Analysts predict it will earn a profit again as early as next year, so… we won’t have to wait long for the answer.
