There might be a developing theme in the energy sector and Uranium stocks.
Lets look at Uranium first.
Above is the daily chart of Uranium, URA. Its current stage 2 base has a depth of only 18% and broke out of a bottom consolidation yesterday on heavy volume. This could be the start of accumulation as it builds out the right side of the base on its way to a possible breakout into new highs. What has me thinking this might be possible is the action of the stocks that are involved in Uranium as well as the entire energy sector.
NexGen Energy (NXE) - Canada based company engaged in the exploration and evaluation of Uranium. It broke out to a new high on heavy volume yesterday. Although not the strongest fundamentally, it appears to be one of the price leaders in the space
Cameco (CCJ) - Another Canadian company engaged in the exploration, refining and conversion of uranium in the US, Canada and Kazakhstan. The fundamentals here appear to be strong. First, price broke out of a bottom base on heavy volume. Fidelity Contrafund is also starting to build a position in the name with increasing exposure since the end of last year. It is still a very small position for them, but the fact they are starting to buy is only a good sign.
The weekly chart below provides an overview of the fundamentals.
CCJ might be starting to build out the right side of the weekly base. There are 3 qtrs of accelerating sales, increasing fund exposure over the last year and solid EPS estimates going out into 2025.
enCore Energy (EU) - Engaged in uranium development in the USA.
An honrable mention, but worth noting, is another uranium stock that is starting to build out the right side of a possible base.
AltC Acquisition (ALCC) - Sam Altman (yes, the GBT guy) nuclear energy SPAC that aims to combine AI and energy.
Yes, I know SPACS have been terrible. But at one point they went through a major hype cycle. And right now, Sam has the potential to produce a nice hype play. Uranium is used in nuclear power plants. Sam’s SPAC is aiming to use nuclear energy and AI. This could be nothing, or a coincidence, or the start of a major hype cycle. The fact it got so much attention yesterday is worth noting as uranium was breaking out as well.
What makes the development in the Uranium sector interesting is the XLE is also breaking out into multi-year highs. Stocks such as TDW and PSX are very strong while XOM and others are starting to find their footing as oil prices climb.
Conl: I do think the Altman SPAC along with uranium stocks offer something to be investigated more. It is still early, but if you remember TDW breaking out on solid earnings (I noted it on twitter and bought it) well before the energy sector got started on its recent move. This might be a similar situation with NXE breaking out before the rest of the group with several possible interesting tailwinds.
Best of luck operators
—NS