Energy Fuels (UUUU) stock price has made a strong recovery this month, soaring to a high of $6.8, its highest level since June 3rd, and 61% above its lowest point this year. This surge has brought its market cap to over $1.2 billion.
What is Energy Fuels?
Energy Fuels is a company involved in the uranium and rare earths business in the United States, Canada, and Brazil.
It is a company in an industry with a large addressable market considering that nuclear energy provides about 20% of all electricity needs in the US. Nuclear also accounts for about 50% of all clean and carbon-free energy.
In addition to uranium, the company has a presence in the rare earth industry, which is one of the most important today. Its operations are in Kenya, Madagascar, Brazil, and Australia. It is also working to produce medical isotopes, which are useful in treatments known as Targeted Alpha Therapy.
Energy Fuels business has been doing well after starting to ramp up its commercial production of RE Carbonate in 2021.
Data by SeekingAlpha shows that its annual revenue has been growing since then. It made over $3.2 million in 2021, a figure that increased to $12.5 million in 2022 and $37.9 million in 2023.
This growth has continued this year as its revenue in the trailing twelve months has jumped to over $45.6 million.
Analysts expect that the firm will continue doing well as it works to restart its Nichols Ranch uranium project in Wyoming. It has also acquired Base Resources, a company in the titanium and other rare earths.
Nuclear energy is back
The main reason why the Energy Fuels stock price has soared is the ongoing investments in the nuclear energy sector.
Microsoft recently inked a deal with Constellation Energy that will see it restart a big station in Pennsylvania. Microsoft hopes that the new long-term contract will give it access to clean energy to power its large data centers.
Other companies are getting serious about the industry. Google has inked a deal with Oklo, a company backed by Sam Altman, to give it modular nuclear solutions.
Modular nuclear energy is a different approach compared to traditional nuclear plants and is significantly safer.
Instead of installing large nuclear plants, these products are significantly smaller and can be installed in large buildings. A small modular plant can power an entire neighborhood, reducing the cost of investing in large transmission lines.
Like Microsoft, Google hopes that its deal with Oklo will give it access to clean power for its data centers.
Therefore, other large technology companies like Amazon, IBM, Alibaba, and Huawei will join the nuclear bandwagon.
Countries are also expected to continue boosting their nuclear infrastructure in the coming years. All these factors will likely continue benefiting Energy Fuels.
Read more: Constellation Energy stock soars on landmark power purchase agreement with Microsoft
Uranium price is rising
Energy Fuels price has also rebounded as uranium prices bounces back. Data by Markets Insider shows that the price of uranium has risen from $78 in September to $83 today. Still, uranium remains significantly below its highest point this year.
Higher uranium prices will boost Energy Fuels in the longer term. The most recent results showed that its revenue rose to $8.59 million, up from $4.3 million in the same period last year.
Analysts expect the upcoming results to show that its revenue will be $5.1 million. For the year, revenue will be $50.3 million followed by $163 million. This revenue figure will likely be higher than estimates because of its recent acquisition of Base Resources.
Still, I believe that the company’s $1.08 billion valuation is very expensive since it is still making substantial losses.
Energy Fuels stock price analysis
The daily chart shows that the Energy Fuels share price has rebounded in the past few weeks. After bottoming at $4.17, it has bounced back by almost 60% to the current $6.65.
The stock has moved above the descending channel shown in orange that connects the highest and lowest swings since last year.
Energy Fuels has also retested the 50% Fibonacci Retracement point and moved above the 50-day and 100-day Exponential Moving Averages (EMA).
Therefore, I suspect that the stock will retreat in the near term and retest the 23.6% Fibonacci Retracement point at $5.30. This will be a formation of the inverse head and shoulders pattern, a popular bullish sign. It has already formed the head at $4.17 and the left shoulder at $5.32. In the long term, the stock will likely continue doing well.
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