Shares of uranium miner and processor Uranium Energy Corp. (UEC) have recorded a cumulative gain of 13.6% this week as of 1 p.m. local time on Thursday (21 November), according to S&P Global Market Intelligence.
In the commodities space, geopolitical tensions and negative events usually act as catalysts to drive prices higher. This week was no exception, as tensions between the West and Russia sparked concerns about disruptions in uranium supply to U.S. nuclear power plants.
This comes after nuclear energy has been on the radar of capital markets and investors due to surging demand for electricity, particularly from new artificial intelligence data centres.
A few days ago, Russia made a statement on Telegram that it would limit exports of enriched uranium to the United States. The news sparked heated discussions, as uranium is one of the few commodities the U.S. still buys from Russia, which supplied about a quarter of U.S. enriched uranium last year.
So naturally, companies like Uranium Energy Corp. are now in a better position than ever. The miner very wisely acquired a number of smaller uranium miners when uranium prices were low between 2017 and 2023, and is now the largest uranium miner in the U.S. by capacity. Uranium Energy also owns uranium-producing assets in Canada and Paraguay.
However, investors should be reminded here that Uranium Energy Corp. hasn’t actually generated any revenue in the last year, as it is still investing in building up its resource base and low-cost mining capacity. The company is also unhedged, so this is a pure-play, leveraged bet on future uranium prices.
With the latest developments in the Russia-Ukraine situation this week, there is now a question as to how future Western demand for nuclear energy will be secured. Uranium Energy Corp. stock may continue to rise in the near term, but this is still a speculative bet and investors need to be cautious.
