Does This Low-Priced Uranium Stock 'Fit the Bill'?

On Tuesday evening, the U.S. Senate passed the Prohibiting Russian Uranium Imports Act by unanimous consent. The bill now moves on to President Biden's desk where it is expected to be signed into law. The bill had been passed in the House of Representatives back in December in an attempt to further cut off Russia in the wake of that nation's now two-year-old invasion of its neighbor Ukraine. 

The bill will ban imports of uranium from Russia 90 days after becoming law, allowing for temporary waivers through January 2028. Russia, for those that do not know, according to the U.S. Department of Energy, provides almost 25% of the enriched uranium that is used to fuel the more than 90 commercial nuclear reactors in the U.S. and is the largest foreign supplier. 

Obviously, U.S. uranium stocks are all up sharply on Wednesday.

One That Fits the Bill

Among those names that "fit the bill" is a company that I have written to you about before. Energy Fuels UUUU trades at less than $10 per share and runs with a market cap of roughly $847M, making it a "small" small cap. 

Energy Fuels is expected to report its first-quarter results this Friday after the closing bell. Projections are for earnings of $0.02 per share on revenue of $26.5M. That would be up from revenue of $19.6M for the year-ago comp.

The first quarter has been the company's top revenue-producing quarter. For the full year of 2023, Energy Fuels posted GAAP EPS of $0.62 on revenue of $37.93M. While that revenue print seems tiny, it was up over 200% year over year. 

For the fourth quarter, Energy Fuels really limped into year's end, posting a GAAP loss of $0.14 per share on revenue of just $465.42K. Yes, that's a "K".

Late April

About a week and a half ago, Energy Fuels agreed to acquire 100% of the shares issued by Australian critical minerals/rare earths name Base Resources in a deal valued at A$375M or $240M. Base already has a presence in Madagascar. Two days later, Energy Resources announced a new pre-feasibility study outlining the cost of expanding its rare element production at its White Mesa Mill facility. 

Clearly, Energy Fuels is gearing up for expansion and doing so on a global scale. The U.S. ban on uranium imported from Russia will likely accelerate the company's growth.

Balance Sheet

As of the end of the year, Energy Fuels had a cash position of $190.5M and current assets of $232.7M. Current liabilities were just $10.4M. Total assets amounted to $401.9M, while total liabilities less equity came to only $22.7M. There was no entry made anywhere on the balance sheet for debt of any kind. 

As the company does not have the cash on hand to make the planned acquisition, I would imagine that the plan is to take on some debt. That said, prior to this deal, the balance sheet was as clean as a whistle.

The Chart

Readers will see that UUUU shares have been mired in a downward-sloped price channel since last September. In February, the floor fell out of support and the stock has been trying to find its footing ever since. 

This week, the shares have hit resistance at their 21-day exponential moving average (EMA). I know the stock is up more than 6% on this news. To me, that is neither here nor there.

In order to make this rally stick, UUUU needs to retake that lower trendline. In doing so, the stock would have to also retake its 50-day simple moving average (SMA), while the daily Moving Average Convergence Divergence (MACD) would have to move from a decisively bearish look to something far more bullish looking.

Basically, I don't think I buy this name at a discount or even on this pop the way it stands. I would buy this name on momentum, once the technicals have turned for the better. They are not there yet. They are, however... on my radar.

At the time of publication, Guilfoyle had no positions in any securities mentioned.