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Prompted by the “short squeeze” and the victory by Prime Minister Shinzo Abe’s Liberal Democratic Party in Japan, uranium stocks made some impressive gains.
On Monday, shares of U.S.-owned and operated nuclear fuel supplier USEC (NYSE:USU) more than doubled on speculation gains in nuclear stocks had bearish traders cover their positions. USEC shares climbed to as high as $15.44 before settling for the day at $11.98. According to Reuters, Monday marked a seventh consecutive climb for USEC’s share price, making for total gains of 228 percent.
Andrew Ross, partner at New York’s First New York Securities LLC, is of the opinion that USEC’s spike ” is purely technical, no real fundamental basis for the stock move,” citing a “short squeeze incited by their recent reverse stock split.”
Dennis Dick, proprietary trade at Bright Trading LLC in Las Vegas expanded slightly on Mr. Ross’ reasoning for USEC’s massive spike claiming that liquidity was also a factor. “Liquidity is very thin in a company of this size” he said “and the combination of that along with what appears to be a short squeeze is really moving the price.”
Overall however, USEC had no significant news on Monday that could explain the impressive spike in its share price, leaving market watchers to assume that Japan’s election of a pro-nuclear party could have played a larger role than perceived in the company’s gains.
Uranium companies making waves
While USEC made the most notable gains, other uranium producers or near-term production companies — primarily with operations in the United States — saw some activity in the wake of the LDP’s election.
Uranium Resources Inc (NASDAQ:URRE) saw its share price climb 23.08 percent or 60 cents on Monday. The company has several projects in Texas and operates the property via in-situ recovery (ISR) techniques. Since it began its operations in 1977, Uranium Resources has over 8 million pounds of uranium via ISR.
Near-term producer Uranerz Energy (NYSEMKT:URZ) was up 21.37 percent, a climb of 25 cents on its share price for the day. The soon-to-be ISR producer is working on development in the Powder River Basin in Wyoming. The company has entered into long-term sales contracts with two of the largest nuclear utilities in the United States. Uranerz also has a processing agreement in place with Cameco.
Ur-Energy (TSX:URE) which is looking to start production from the Lost Creek mine in Wyoming in just a few short weeks, was up 14.05 percent on Monday ending the day 17 cents higher at $1.38.
Denison Mines (TSX:DML) which produces uranium from McClean Lake, a joint venture project with AREVA, (EPA:AREVA) saw its shares climb 7.09 percent to close the day at $1.37.
The world’s largest diversified publicly traded uranium company was not left untouched by Monday’s rise in prices. Cameco (TSX:CCO) saw a small jump of 3.36 percent for the day, closing at $22.74.