Here's Why Uranium Energy Stock Jumped 24.8% in September

Key Points

• The U.S. government announced it would take steps to support domestic production and enrichment of nuclear materials.

• The U.S. aims to support domestic production and reduce dependence on Russia.

• Some analysts raised their price targets on Uranium Energy stock in September.

• 10 stocks we like better than Uranium Energy ›

Shares of Uranium Energy Corp. (NYSEMKT: UEC) increased 24.8% in September, according to data provided by S&P Global Market Intelligence. The stock moved higher as the U.S. government signalled policies aimed at boosting domestic production of nuclear materials.

It has been a strong year for uranium and nuclear energy-related companies, which have surged higher as the U.S. and countries worldwide signal continued long-term support to grow their nuclear energy capacity.

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The U.S. plans to boost its uranium reserves

On Sept. 15, U.S. President Donald Trump's administration announced that it would take steps to support domestic nuclear materials production and enrichment. U.S. Energy Secretary Chris Wright recommended that the U.S. increase its strategic uranium reserve, essentially a government stockpile, to help buffer against potential supply disruptions from Russian providers.

This is part of a larger geopolitical shift: Uranium is a critical input for nuclear power (and in defense). A significant portion of U.S. enrichment capacity has weakened, and Russia continues to control a substantial share of global uranium conversion and enrichment.

The Prohibiting Russian Uranium Imports Act was signed into law in May 2024, banning imports of Russian low-enriched uranium starting August 2024, with waivers allowing purchases on a limited basis until Jan. 1, 2028. This creates an urgent need to replace about one-quarter of enriched uranium currently imported from Russia.

Uranium Energy Corp. is an American-based uranium miner. Instead of digging giant open pits, it primarily uses a method called in-situ recovery, where a solution is pumped underground to dissolve uranium and bring it to the surface -- a cleaner and cheaper approach. In the nuclear fuel supply chain, its role is at the very beginning, producing the raw uranium that later gets enriched into reactor fuel.

Uranium Energy saw some price target hikes, but not all are bullish

Uranium Energy stock rallied as it was met with price target raises from investment bank analysts covering the company. H.C. Wainwright raised its price target from $12.75 to $19.75, noting that it has made "impressive strides in project development" and is expected to benefit from changes in the uranium space.

Meanwhile, Roth Capital raised its price target from $11.50 to $16, citing the strength of the uranium market as justifying higher valuations due to improving market conditions and a strong outlook for prices and demand.

Not all were bullish, however. Also in September, Spruce Point Capital announced it is shorting Uranium Energy and sees a 65%-85% potential downside risk. Concerns included its CEO's connections, ability to deliver, its asset base, and its ability to operate at scale. As a short seller, Spruce Point Capital stands to profit from a decline in Uranium Energy Corp's stock price.

Is it a buy?

The recommendation to boost the uranium reserve boosted confidence across the industry, driving several uranium and nuclear stocks higher during the month. However, investors should bear in mind that Uranium Energy has been operating at a loss for several years now, making it a high-risk stock to play the nuclear energy boom.

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Courtney Carlsen 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.