Why Energy Fuels Stock Just Popped

Key Points

• The U.S. government may take a 10% stake in lithium miner Lithium Americas.

• Is Energy Fuels stock next?

• Both companies mine metals deemed "strategic" by the Trump administration.

• 10 stocks we like better than Energy Fuels ›

Lithium Americas (NYSE: LAC) stock doubled Wednesday after Reuters reported the U.S. government may take a 10% stake in the start-up miner of lithium for electric car batteries.

Soon after, investors saw a 10.8% spike (through 11:25 a.m. ET) in a completely different mining stock -- Energy Fuels (NYSEMKT: UUUU), which mines not lithium, but uranium for nuclear power plants.

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The two stocks are not the same, but the reason they're rising might be.

Image source: Getty Images.

What Reuters said about Lithium Americas

The government plans to "renegotiate" a $2.3 billion loan to Lithium Americas, says Reuters, requiring Lithium Americas to hand over a 10% stake to win the loan. Investors probably figure that if the news is true, once the government has a vested interest in Lithium Americas, it won't ever let the company fail. (Lithium Americas currently has no profit and no revenue, and it probably won't begin generating revenue before 2027.)

What does this have to do with Energy Fuels?

Well, the logic is similar. Like lithium, uranium is a strategic mineral to which the Trump administration wants secure access. So while the government hasn't said it wants a stake in Uranium Fuels yet, it might make that decision in the future. Energy Fuels also has an edge because, unlike Lithium Americas (which is based in Vancouver, Canada), Energy Fuels is an American company (based in Colorado).

Is Energy Fuels stock a buy?

In the absence of other news specific to Energy Fuels, this is my guess about what's driving the stock higher. It might even be the right guess, and it might even pan out in time.

Right now, though, Energy Fuels is not without risk. The company's expected to report a profit next year, but it remains unprofitable currently. If you decide to invest in it, do so knowing that's a risk.

Should you invest $1,000 in Energy Fuels right now?

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.