Uranium, the powerhouse element, fuels nuclear reactors, playing a crucial role in the clean energy transition for a sustainable, low-carbon future. The uranium market has been on a rollercoaster in 2024, with supply disruptions and the looming U.S. ban on Russian-enriched uranium propelling uranium prices (UXF25) to a 17-year high above $100 in February before settling around $90 in late May. The ban, which takes effect in mid-August, unlocked $2.72 billion in federal funding to bolster the domestic uranium industry.
With demand for uranium projected to rise, driven by the shift toward cleaner nuclear energy, companies like enCore Energy Corp. (EU), NexGen Energy Ltd. (NXE), and Uranium Energy Corp. (UEC) are set to benefit from higher prices.
Demonstrating stellar market performance over the past year, these stocks have earned consensus “Strong Buy” ratings on Wall Street, with analysts forecasting double-digit upside potential. Let’s take a closer look.
Uranium Stock #1: enCore Energy
With a market cap of $735.8 million, Corpus Christi, Texas-based enCore Energy Corp. (EU) is the only U.S. uranium producer with multiple active production facilities. Utilizing In-Situ Recovery (ISR) technology, the company provides clean, reliable fuel for nuclear energy. Led by industry experts, enCore has demonstrated production success in South Texas and is advancing projects in South Dakota and Wyoming while maintaining significant resources in New Mexico.
Despite slipping 21% from the 52-week high of $5.05 set on May 7, shares of enCore Energy have rallied an impressive 64.2% over the past 52 weeks, outperforming the broader S&P 500 Index's ($SPX) 24.8% returns, as well as the VanEck Uranium & Nuclear Energy ETF’s (NLR) 36.1% gains over the same period.
In terms of valuation, the stock trades at 20.43 times sales. While not exactly a bargain, the valuation is slightly lower than its peer, Ur-Energy Inc. (URG).
On May 10, the company reported Q1 earnings results, with revenue amounting to $30.4 million due to the completed sale of 320,000 pounds of enCore’s inventories to major U.S. nuclear utilities at a realized sales price of $95.28 per pound of uranium. The company managed to reduce its net loss for the quarter by 68.2% sequentially to $5.3 million, and narrowed its loss per share by 70% to $0.03.
At the end of Q1, enCore held a cash balance of a whopping $90.1 million, compared to $3.2 million a year ago.
In June, enCore Energy announced the successful startup of production at the Alta Mesa Uranium Central Processing Plant and Wellfield. With this restart, enCore becomes the only U.S. uranium producer with multiple operational facilities. The initial ramp-up is set to progressively increase uranium production, with the first yellowcake shipment anticipated within 60 to 90 days. This milestone marks enCore’s commitment to advancing clean energy and solidifying its position as a key player in the uranium industry.
Analysts tracking enCore Energy project the company’s loss per share to narrow 66.7% to $0.05 in fiscal 2024, before swinging to a profit of $0.21 per share in fiscal 2025.
EU has a unanimous “Strong Buy” rating from all four analysts covering the stock.
The average analyst price target of $6.43 indicates a potential upside of 63.2% from the current price levels. The Street-high price target of $7.50 suggests the stock could rally as much as 90.4%.
Uranium Stock #2: NexGen Energy
Vancouver-based NexGen Energy Ltd. (NXE) is a pioneering exploration and development company focused on advancing uranium properties in Canada. With a market cap of nearly $4 billion, NexGen is dedicated to developing the Rook I Project into a leading, low-cost uranium mine globally, while prioritizing environmental and social governance.
The company boasts a robust portfolio, including the high-grade Arrow Deposit and other promising discoveries like South Arrow, Harpoon, Bow, and the Cannon area, positioning it at the forefront of sustainable resource development.
Despite a 21% dip from the May highs of $8.88, shares of NexGen Energy have gained 52.7% over the past 52 weeks, outpacing the performance of both the SPX and NLR over the same time frame.
NexGen unveiled its Q1 earnings results on May 8. As an exploration and development stage company, it operates without revenues, consistently incurring operating losses. As of March 31, cash amounted to C$383.2 million ($279.8 million), marking a 32% sequential increase. Despite an accumulated deficit of C$338.6 million ($247.3 million) and the need for additional funding, NexGen maintains sufficient working capital to cover its obligations for the next 15 months as it advances mineral property exploration and development.
In Q1, NexGen Energy received positive feedback from the Canadian Nuclear Safety Commission on its federal Environmental Assessment (EA), marking a significant step forward. Additionally, the company made a new uranium discovery on its SW2 Property near the Arrow Deposit, showcasing intense mineralization potential. Concurrently, NexGen advanced front-end engineering and design (FEED) for the Rook I Project, moving decisively through critical engineering and procurement phases.
NexGen Energy aims to progress the Rook I Project through detailed engineering, site confirmation, and process plant optimization studies following the FEED phase. The company also plans to advance federal EA and licensing processes, engaging with regulators and communities to secure necessary approvals for its uranium mine and mill operations.
Analysts tracking NexGen Energy expect the company’s loss per share to widen to $0.15 in fiscal 2024 before improving by 46.7% to $0.08 in fiscal 2025.
NXE stock has a consensus “Strong Buy” rating overall. Out of the nine analysts offering recommendations for the stock, five suggest a “Strong Buy,” and four advise a “Moderate Buy.”
The average analyst price target of $10.23 indicates a potential upside of 46.5% from the current price levels. The Street-high price target of $15.54 suggests that the stock could rally as much as 122.6%.
Uranium Stock #3: Uranium Energy
Uranium Energy Corp. (UEC) focuses on uranium, along with titanium exploration, extraction, and processing across the U.S., Canada, and Paraguay. With projects like Palangana, Goliad, and Salvo in Texas, and Anderson and Workman Creek in Arizona, the company aims to secure a robust position in global uranium supply. Formerly Carlin Gold Inc., Uranium Energy rebranded in 2005 and continues its headquarters in Corpus Christi, driving innovation in resource development. Its market cap currently stands at $2.4 billion.
While it’s down 28.4% from its February highs of $8.34, UEC stock has rallied 76.3% over the past 52 weeks, outshining the gains of the SPX and NLR.
From a valuation standpoint, the stock is trading at 13.95 times sales, which is lower than its own five-year average of 31.69x.
Uranium Energy Corp. is not raking in profits yet. For fiscal Q3 2024, reported on June 7, it posted a net loss of $19.7 million, or $0.05 per share, with a $13.8 million loss from operations. Plus, with no uranium sales to date this fiscal year, it meant zero revenue for the quarter. Its future profitability hinges on uranium prices and project success.
With $141.2 million in working capital as of April 30, including $87.7 million in cash and $63.2 million in purchased uranium inventory, the company aims to ride the wave of rising nuclear power demand and potential uranium price hikes. It is confident that the cash resources and potential uranium sales will keep operations smooth for the next 12 months.
Analysts tracking Uranium Energy expect the company’s EPS to reach $0.03 in fiscal 2024, reversing last year’s loss, and then rise 333.3% to $0.13 in fiscal 2025.
Analysts are upbeat on UEC, with a consensus rating of "Strong Buy" based on five analysts covering the stock. Four analysts recommend a "Strong Buy" rating, while one has a "Moderate Buy" rating.
The average analyst price target of $9.75 indicates a potential upside of 62.2% from the current price levels. However, the Street-high price target of $13 suggests that the stock could rally as much as 116.3%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
