The uranium industry has been on a roll lately, with stock prices surging thanks to some positive news. Major players like Cameco (CCJ) and Denison Mines (DNN) have seen their shares rally sharply after the U.S. announced plans to offer up to $3.4 billion in funding to support domestic uranium production. However, these popular uranium stocks are now trading close to their average analyst price targets, suggesting limited room for additional upside.
But for investors still looking to take part in the uranium rush, there are still some lesser-known stocks that could potentially see significant gains. The recent rally was fueled by President Biden signing a bill to ban Russian uranium imports, aiming to punish Moscow for the Ukraine invasion and further reduce reliance on Russian energy sources. The ban, set to take effect in mid-August 2024, unlocked $2.72 billion in federal funding to expand the domestic uranium industry. As demand for uranium increases, driven by an increased push toward cleaner nuclear energy, companies involved in its exploration, mining, and processing stand to benefit from higher prices.
So, while the industry leaders are close to achieving Wall Street's price targets, let's take a look at a few smaller uranium stocks with significant upside potential. These three stocks, in particular, have caught the eye of analysts, who believe they could rally by 39% or more, capitalizing on the bullish sentiment surrounding uranium.
Uranium Stock #1: Uranium Royalty Corp (UROY)
Uranium Royalty Corp (UROY) isn't a miner, but a pure-play uranium royalty company that focuses on gaining exposure to uranium prices through strategic investments in uranium interests. This includes royalties, streams, debt, equity investments in uranium companies, and holdings of physical uranium.
Year-to-date, UROY is up about 2.2%, and the shares have popped 19.5% in the last month. However, you can still pick up the shares at a roughly 26.6% discount to 52-week highs.
With a market cap of around $326 million, UROY's valuation metrics suggest plenty of room for growth. The company's EV/EBITDA ratio is 2.60, less than half of the energy sector median.
Earlier this year, Uranium Royalty raised over $22 million in capital by issuing 6.7 million common shares at $3.40 each. The proceeds from this offering are expected to be used for future uranium purchases and acquisitions, positioning the company to capitalize on potential opportunities in the uranium market.
In its most recent earnings report for the fiscal third quarter ended Jan. 31, UROY reported earnings per share of $0.02, beating the consensus estimate.
For the full fiscal year 2024, analysts' consensus estimate for UROY's earnings per share stands at $0.02. While UROY is not currently profitable, posting a net loss of $5.8 million in fiscal 2023, its royalty-based business model positions it to benefit from potential upswings in uranium prices and strategic acquisitions of additional royalty interests.
Analysts are bullish on Uranium Royalty stock, with a consensus rating of "Strong Buy" based on recommendations from two analysts. One analyst has assigned a "Strong Buy" rating, while the other has a "Moderate Buy" rating. The mean price target for UROY among this pair is $6.37, representing a potential upside of 136.8% from the current price.
Uranium Stock #2: Centrus Energy Corp (LEU)
Centrus Energy Corp (LEU) is a global player in the energy sector, supplying low-enriched uranium (LEU) for commercial nuclear power plants and offering technical solutions for the nuclear industry.
Currently, LEU is down 12% in 2024, and trading 22% below its 52-week high. Like UROY, though, the stock has popped in the past month, up 13.9% in this time frame.
With a market cap of around $745 million, LEU's valuation metrics suggest the stock still has room to grow. LEU's forward price/earnings ratio of 17.70 is a healthy 75% discount to its own five-year average multiples.
Fundamentally, LEU is profitable, generating net income of $71.1 million on $297 million in revenue over the trailing twelve months. However, the company's profitability heavily depends on uranium pricing and contract flows, given its role as a uranium supplier.
In its most recent earnings report for Q1 2024, released on May 7, Centrus reported revenue of $43.7 million, missing estimates of $76.9 million, and a net loss of $6.1 million or $0.38 per share, significantly lower than the expected earnings of $0.50 per share.
Looking ahead, analysts expect Centrus to report earnings of $0.77 per share on revenue of $86.8 million for Q2 2024. The consensus estimate for the full fiscal year 2024 calls for earnings of $2.61 per share on revenue of $351.4 million.
Analysts are all-in on LEU, with a unanimous rating of "Strong Buy" based on recommendations from the three analysts in coverage. The mean price target for LEU is $66.00, representing a potential upside of 39.8% from the current price.
Uranium Stock #3: Uranium Energy Corp (UEC)
Uranium Energy Corp (UEC) is a key player in the uranium mining and exploration scene, focusing on low-cost and environmentally friendly in-situ recovery (ISR) projects in the U.S.
Year-to-date in 2024, UEC is up about 11.9%, but still trades about 14.2% below its 52-week high.
With a market cap of around $2.85 billion, UEC is the largest uranium stock on our list, but analysts still see more room to grow.
While UEC isn't currently profitable, posting a net loss of $4.9 million on $59 million in revenue over the trailing twelve months, its profitability will depend heavily on uranium pricing and the successful execution of its projects. As a pure-play uranium company, UEC stands to benefit from the growing global demand for nuclear power and the potential upswing in uranium prices.
In its most recent earnings report for fiscal Q2 of 2024, which ended Jan. 31, UEC reported earnings per share of $0.01, meeting the consensus estimate. Looking ahead, analysts estimate UEC to report earnings of $0.01 per share on revenue of $21 million for the upcoming third quarter.
For the full fiscal year 2024, the consensus estimate from three analysts calls for earnings of $0.08 per share on revenue of $79.63 million. UEC's next earnings release is expected on June 13.
Analysts are upbeat on UEC, with a consensus rating of "Strong Buy" based on recommendations from six analysts. Five analysts have assigned a "Strong Buy" rating, while one has a "Moderate Buy" rating. The mean price target for UEC is $9.95, representing a potential upside of 40.3% from current levels.
The Bottom Line on Uranium Stocks
In summary, the uranium sector is buzzing with activity - and while big names like Cameco and Denison are already teetering near Wall Street's consensus price targets, there's still plenty of room to run for some of these smaller, lesser-known stocks like UROY, LEU, and UEC. With analysts predicting higher prices in the forecast, these stocks could offer substantial upside potential for investors looking to capitalize on the positive momentum in the uranium market.
On the date of publication, Ebube Jones 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.
