We recently started a series called “Penny Stock of the Day”. These ideas are geared towards traders with an extremely high risk appetite.
Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these trades, please make sure to pay vigilant attention to pricing moves and have a strict stop loss in place to avoid significant losses.
Penny Stock of the Day: Uranium Energy Corp. (NYSE: UEC)
Today’s penny stock pick is the uranium production and exploration company, Uranium Energy Corp. (NYSE: UEC).
Uranium Energy Corp. engages in the exploration, pre-extraction, extraction, and processing of uranium and titanium concentrates properties in the United States, Canada, and the Republic of Paraguay.
The company owns interests in the Allemand-Ross, Antelope, Barge, Black Hills, Brown Ranch, Bull Springs, Central Shirly Basin, Charlie, Christensen Ranch, Clarkson Hills, Crooks Creek, Crook’s Mountain, Crossroads, Cyclone Rim, East Shirley Basin, Gas Hills, Horse Creek, Irigaray, Jab/West Jab, Ludeman, Moore Ranch, Mule Creek, Niles Ranch, Nine Mile Lake, Pine Ridge, Pine Tree U1, Pumpkin Creek, Red Rim, Reno Creek, Ross Flats, Sand Creek, South Pine Ridge, South Reno Creek, South Sweetwater, Stewart Creek, Taylor Ranch, Twin Buttes, West Beaver Rim, West Crook’s Creek, and West Sweetwater properties located in Wyoming, the United States; and Burke Hollow, Goliad, La Palangana, Salvo, and Longhorn projects situated in Texas.
It also owns the Anderson, Los Cuatros, and Workman Creek mines located in Arizona; C de Baca and Dalton Pass projects situated in New Mexico; Alexandra, Beatty River, Black Lake, Brander Lake, Candle Lake, Carswell, Christie Lake, Close Lake, Cree Extension, Diabase Peninsula, Erica, Henday, Hidden Bay, Horseshoe-Raven, Key West, Laurie, Millennium, Milliken, Mirror River, Moon Lake, Moore Tomblin, Nikita, Riou Lake, Roughrider, Shea Creek, Uchrich, Waterfound River, West Bear, Wheeler River, and Wolly properties located in Saskatchewan, Canada; and Kiggavik project situated in Nunavut, and the Yutty and Oviedo properties located in Paraguay, as well as owns and operates a processing plants and facilities, consisting of Irigaray Central and Christensen Ranch in Wyoming; and Hobson Central in Texas.
Website: https://www.uraniumenergy.com/
Latest 10-k report: https://www.uraniumenergy.com/_resources/filings/2024/2024-Q4-Form-10-K.pdf?v=041706
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for UEC in the last 3 months, the stock has an average price target of $10.50, which is nearly 118% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- President Trump ordered a probe into potentially imposing tariffs on critical mineral imports, including uranium. This has created tailwinds for domestic uranium miners like Uranium Energy. The U.S. is the largest uranium-consuming country in the world, and the supply of the radioactive metal is critical to ensuring energy independence.
- Hedge Funds Increased Holdings by 1.4M Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock has been forming a falling wedge pattern for the past several months. These are marked as purple lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.
UEC – Daily Chart
#2 Bullish RSI: The RSI is currently nearing 50 and moving higher, indicating possible bullishness.
#3 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#4 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a pink color dotted line. This looks like a good area for the stock to move higher.
UEC – Weekly Chart
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart and is also moving higher from oversold levels, indicating possible bullishness.
#6 Price above MA: The stock is currently above its 200-day SMA, indicating that the bulls are still in control.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for UEC is above the price of $4.95.
Target Prices: Our first target is $6.50. If it closes above that level, the second target price is $8.00.
Stop Loss: To limit risk, place a stop loss at $4.00. Note that the stop loss is on a closing basis.
Our target potential upside is 31% to 62%.
For a risk of $0.95, our first target reward is $1.55, and the second target reward is $3.05. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses.
UEC – Consolidated Statements of Operations
- The company has a limited financial and operating history, with significant negative operating cash flow and an accumulated deficit to date.
- UEC’s operations are capital-intensive and future capital expenditures are expected to be substantial.
- The majority of the company’s directors and officers are involved in other business ventures including similar capacities with other private or publicly-traded companies and may be subject to conflicts of interest.
- Despite being a loss-making company, the executives are being paid significant compensation.
UEC – Executive Compensation
As you can see, today’s featured penny stock offers big upside potential… but it also comes with a number of risks and red flags. As always, when dealing with penny stocks, we advise caution before entering into such high-risk ventures. Remember to think before you trade… understand the risks… and if you decide to trade, stick to your stop-losses!
Happy Trading!
Trades of the Day Research Team
READ BEFORE TRADING PENNY STOCKS: The allure of penny stocks lies in their potential to deliver massive gains in a short period of time. However, in exchange for that opportunity, most penny stocks carry tremendous risk. They can be extremely volatile and are susceptible to “pump and dump” schemes and fraud.
Unlike regular stocks, the financial condition of most penny stock companies can be extremely difficult to analyze, as the majority of such stocks are traded on over-the-counter (OTC) exchanges, which are typically less transparent and less regulated than the major exchanges. In fact, in the penny stock space, it’s often easier to spot warning signs and red flags than it is to identify a sound investment. Nevertheless, we do our best to identify short-term trade opportunities in this exciting space because we know some of our readers are looking for high-risk, high-reward ideas. We just urge you to make sure you fully understand the risks before making any of these trades.
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Source: Trades of the Day