The clouds hung over uranium stocks for a full ten years after the Fukushima reactor meltdown in 2011 have finally showed signs of clearing. Nuclear power may still not be universally popular; however, given concerns about global warming it is increasingly strengthening its profile as a source of non-carbon energy supplies.
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US-based Uranium Energy Corp is a uranium mining stock attracting attention thanks to the ability of the stock to allow investors to gain exposure to the nuclear energy sector.
Uranium markets themselves are hard to access, so for many traders buying stocks in the uranium energy sector is the next best way of taking a position. The question, “why buy Uranium Energy Corp stocks?” is best answered by establishing if it can deliver on the mission statement found at the top of the Uranium Energy Corp website homepage, which states:
“Uranium Energy, low-cost fuel for emission-free electricity”Source: UEC
Table of contents
WHO IS URANIUM ENERGY CORP (NYSE: UEC)?
The extreme risk-return ratio associated with UEC stock means the market attracts short-term speculators and day traders as well as buy-and-hold investors. That can lead to dramatic price moves such as the +165% price surge in UEC stock seen between 27th January and 14th April 2022, and the almost halving of the share price between 2nd February and 2nd May in 2023. 162% price surge between the 23rd of August and the 8th of November 2021, or to drop by 22.14% in the space of one week as happened after the 15th of November 2021.
Uranium Energy Corp can be seen as a buy or a sell and indeed both depending on which investment time horizons are being used. The one certainty is that UEC offers something for everyone.
Founded in 2003, Uranium Energy Corp has its head office in Corpus Christi, Texas. Its stock is listed on the New York Stock Exchange under ticker UEC, and it has a market cap in the region of $889.6m.
Uranium Energy Corp is the largest diversified, US-focused, uranium company. Its core operations are US based and follow a streamlined business model. The firm is very much about getting uranium out of the ground and to US based customers.
The hub-and-spoke operations in South Texas centre around the fully-licensed Hobson Processing Facility, which is central to the Palangana, Burke Hollow and Goliad ISR projects. It also boasts the largest permitted, pre-construction ISR uranium project in the U.S., in Wyoming. The firm's operations are located close to its main market, US nuclear energy producers which mean the company is well positioned to take advantage of any short-term spikes in uranium prices.
The company's management team is made up of experienced industry experts. Amir Adnani, who holds the positions of President, CEO and Director of Uranium Energy Corp, has been a key player in the firm's growth and the rest of the management team also have many decades of hands-on experience in the key facets of uranium exploration, development, and mining.
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Adnani currently holds approximately $10.8m of UEC stock. and has never sold any of his position.
which means he has a vested interest in the stock price rising, and aligns his interests with those of retail investors. Insider trading reports show they have upped their stakes in the firm in the last six months.
More concerning for potential investors are the insider dealing reports which reveal that over the last 12 months members of the senior management team have sold more UEC stock than they have bought. The net balance being -686,708 shares which at current market prices equates to approximately $1.68m worth of stock.
UEC 3 MONTH STOCK PRICE FORECAST
As confirmed by the beta of 1.99 UEC stock price volatility is at the high end of the range. This has resulted in the stock becoming a favourite among day traders who run speculative short-term strategies. Their involvement in the market just adds to those volatility levels and creates a lot of ‘noise' around the stock.
After the recent slump in the price of uranium, and the RSI on the UEC Daily Price Chart dropping to 38.0, there is a chance that the stock is oversold on a short-term basis. As stocks can be sold short as well as bought long, many have approached the market with an open mind and asked the question – Uranium Energy Corp stock, buy or sell?
Those looking to use RSI to identify opportunities to buy the dip would do well to consider how many false signals that metric has provided in recent months. Since the beginning of March, there have been two instances where Daily RSI has breached 30, but neither were followed by significant rallies in the UEC stock price. That reflects the ability of traders to keep on selling even though traditional metrics suggest they shouldn't.
URANIUM ENERGY CORP (UEC) SHARE PRICE 2021-2023 – RSI NEAR 30
Returns of that scale mean that institutional investors and hedge funds are actively short selling UEC stock in the market.
- As of 3rd May 2023 investors have sold short 44,810,000 shares of UEC.Uranium Energy Corp saw a decrease in short interest during April. The total of short positions dropping by 11.20% over the course of the month.
- The short interest ratio, also known as the ‘days to cover ratio' for UEC, is currently 5.8. The ratio is calculated by dividing the number of shares of a stock sold short divided by its average trading volume. A short interest ratio ranging between 1 and 4 generally indicates strong positive sentiment about a stock.
One investor's shorting opportunity is another one's chance to buy at the bottom and there is little reason to discount the UEC stock price bouncing from its recent sell-off. The swing-low $2.73 on the 27th January 2022 could be a key price level. If price continues to trade above that price point, then a bullish pattern of ‘higher highs and higher lows’ which dates back to November 2020 will remain intact. A break below would confirm the stock has entered into a bearish price pattern and open the door to further downwards price movement.
URANIUM ENERGY CORP (UEC) SHARE PRICE 2020 – 2023 – SWING LOW PATTERN
To establish the short-term prospects for UEC, it is essential to look at what fundamental factors could trigger a price move. As with other commodity markets, short-term price moves in the uranium market are driven mainly by demand factors. A change in policies relating to carbon emissions can be released at any time, but the market's supply side takes months and years to adapt. Exploration and extraction of uranium is a multi-year project with little certainty over actual resource levels until mining begins.
Global economic growth and the price of other types of energy sources also come into play. Geopolitical risk events, such as the Russia-Ukraine conflict which pose a threat to oil and gas supplies can send prices in those markets through the roof. That then increases the attractiveness of relatively secure US-based energy sources such as the uranium reserves of Uranium Energy Corp.
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Economic production levels and the demand for energy can be influenced by various factors. Fiscal policy measures such as US President Joe Biden's $1.2trn infrastructure bill which is a multi-year project which launched in 2021 and there are also the actions of central bankers, and their interest rate polices to consider.
UEC 1 YEAR STOCK PRICE FORECAST
Uranium Energy Corp stock predictions for the next 12 months involve incorporating factors relating directly to the firm's own actions as well as macro trends.
UEC is unhedged, with no contracts at pre-set prices, which means it is the uranium mining firm most highly leveraged to uranium's price. If the price of uranium rises there is potential for the firm to expand production by bringing less efficient mines online. The Company is ready to re-start in-situ recovery (ISR) production from its licensed and operational facilities in South Texas and to start ISR production in Wyoming with even a modest move in the price of uranium.
The production-ready extra capacity of four million pounds U3O8 per year is more than is currently produced in the US in total, and there is also a substantial pipeline of additional projects. In its own words, “UEC is the next-generation producer, ready to provide low-cost, low-capital fuel for the country's large electricity-generating nuclear fleet” (Source: UEC).
MEDIUM TERM FUNDAMENTALS
The price of uranium in the spot market is also something to monitor as retail investors don't have any easy ways of buying the metal itself. Therefore, gaining exposure to the nuclear power sector often involves buying uranium mining stocks such as UEC.
Data from CNN Creports that UEC stock forecasts by industry experts for the next 12 months have a median share price target of $6.80. That is some way above current price levels, and the high end of the range of one-year forecasts is a target price of $8.25, with the low estimate coming in at $5.75.
URANIUM ENERGY CORP (UEC) SHARE PRICE 2021 – 2023 – PRICE FORECASTS
URANIUM ENERGY CORP (UEC) SHARE PRICE 2021 – 2023 – WEEKLY SMAS
MEDIUM TERM TECHNICALS
Technical support for the UEC share price is offered by the 200 SMA on the Weekly Price Chart which currently sits around $2.43. Resistance price levels on the same timeframe include the 20, 50, and 100 SMAs which are in the region of 3.39, $3.62, and $3.53, respectively.
URANIUM ENERGY CORP BROKER RATINGS
Uranium Energy Corp (UEC)
|P/E Ratio (TTM)||35.4|
|Price to Sales Ratio (TTM)||6.83|
|Return on Equity (ROE)||4.41%|
|Debt to Equity||0.16|
|Stock held by insiders||1.71%|
|Stock held by institutions||50.88%|
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Uranium Energy Corp is not the largest firm in the uranium mining sector, but it is large enough to merit being covered by six analysts from institutional investors. All of those brokers currently rate UEC stock a ‘Buy’. It may be smaller than some of its peer group, but UEC’s close correlation to uranium prices and self-defined approach as an insurgent stock mean UEC is a uranium miner catching much attention.
UEC 5 YEAR STOCK PRICE FORECAST
Any Uranium Energy Corp stock forecast for 2028 will be based mainly around the price of uranium. The firm's stock price is closely correlated to the price of the metal it mines and of which it has substantial extra reserves.
Capital investment on exploration projects and the setting up of the infrastructure required to extract minerals takes time. but once a new mine is opened the ongoing running costs can be small in comparison to the cost of getting the operation set up in the first place.
If there is a spike in the price of uranium on the open market it can lead to a greater proportional percentage increase in Uranium Energy Corp profit margins. In the latest financial report UEC states that its average cost of mining uranium is $38 per pound. If uranium prices in the spot market are $40 per pound and increase by 10% to $44, then the increase in the UEC profit margin will be substantially greater than 10% = (40-38 / 44-38) = (2/6) = 33%.
Nuclear energy still divides opinion due to the toxic waste generated, but momentum in the non-carbon electricity generation sector is building. The option of bringing Small Modular Reactors online, which are typically a third of the size of traditional plants, offers an opportunity to expand the use of nuclear power at a faster rate than previously possible. Efforts to reposition the industry as the best non-carbon alternative include the firm recently upgrading its Corporate and Social Responsibility (CSR) policy.
As the Uranium Energy Corp website states, the firm has “launched formal development of an Environmental, Social and Governance (“ESG”) program to build on the Company's robust safety, health, and environmental protection systems in place while identifying new sustainability initiatives for enhancement”.
WHO OWNS UEC STOCK?
Firms that tick the box in terms of being good for the environment can expect increased investor interest. Pension funds and other institutional investors, in particular, consider ethical issues a granular detail before making an investment decision. Several high-profile institutional investors own uranium Energy Corp stock. The list of significant shareholders includes State Street Corp (5.8%), BlackRock Inc. (5.74%), Vanguard Group Inc (5.12%), and Mirae Asset Global Investments (4.6%).
These firms carry out extensive due diligence before investing in companies, so their willingness to invest in the firm offers some comfort to retail investors. They also have long-term investment horizons, and the presence of high-profile investment banks and BlackRock, the world's largest investment company, doesn't guarantee immediate returns. It could be they are in positions for the long haul, so individual investors may also need a buy-and-hold approach to optimise their returns.
WHY BUY UEC STOCKS?
With markets in uranium hard to access, buying or selling Uranium Energy Corp offers investors an indirect way to take a view on the prospects of the nuclear industry as a whole. UEC is one of the firms which is most highly leveraged to the spot price of uranium and as pure a play on the sector as is possible.
Short term price drivers will be essentially demand-based, and these can include shock events such as political announcements. Another Fukushima style accident could drive the stock price down towards levels from which it might never recover. There are, however, few viable, reliable, and predictable alternatives to carbon-based fuels on the market. Nuclear power isn't the first pick for ethical investors, but it is increasingly seen as the ‘least bad' non-recyclable source of electric power.
Over a longer investment time-horizon supply side issues come more into play. In that respect UEC has an advantage over other uranium mining stocks because US based reserves of the metal are seen as a strategic asset. They play a crucial role in ensuring the world’s largest economy can keep the lights on. That positioning is made more relevant by the fact that the US accounts for more than 30% of the global output of nuclear energy.
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The only thing which can be guaranteed about investing in Uranium Energy Corp is that it would be a roller coaster ride. The extent to which it is a hot topic in the day trading community adds to short-term price volatility, but that does mean it offers investment opportunities to those running short-term or long-term strategies or a combination of both.