Shares in the penny stock of Uranium Resources (Nasdaq: URRE) can not seem to stop the slide they are on even though analysts think URRE could more than double. Although volume was nearly 625 thousand in the last trading session, volume has been declining since the start of the year which could signify why the stock price of URRE has as well.
Shares in Uranium Resources closed down nearly -1% at $0.83 despite the fact that, on April 5th, the penny stock received coverage by Wall Street analysts at Dahlman Rose who set a “buy” rating and $1.45 price target on URRE. From the current level, that would be a 74% gain on the penny stock. It is unlikely that the recently filed 8-K by the company will help its price since it indicates that URRE was fined $50 for trespassing on Navajo Land. (see here).
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URRE Stock Snap Shot:
Market Cap: 88.04M
Price/Book (mrq): 3.36
(May 27, 2011): 1.98
(Oct 4, 2011): 0.52
% Below 50-Day Mov Avg: -9.80%
% Below 200-Day Mov Avg: -12.0%
Avg Vol (3 month): 1,314,590
Avg Vol (10 day): 489,238
Shares Outstanding: 106.06M
% Held by Insiders: 7.13%
% Held by Institutions: 39.50%
(a/o Feb 29, 2012): 13.39M
Uranium Resources had a great rally in January gaining 53% during a two-week run of URRE. Uranium miners in general had a great start for 2012, after suffering through one of the toughest years ever for uranium investors. At first, analysts believed the 2011 weakness was due to the Japanese nuclear catastrophe which led to restored concerns over nuclear power.
Germany fueled to nuclear demand weakness by issuing statements to the effect that the country would look to reduce use of nuclear power in the hopes of eventually phasing out the power source in the country. With reduced demand and almost free natural gas as a competitive power source, companies like Uranium Resources have suffered through the toughest times the industry has seen in decades.
The Rescue: China and India
If China and India start to increase their uranium demand, demand will oupace supply and like Economic 101 teaches you, the demand curve will force for higher prices. When this happens, not if, expect to see the share price of URRE to benefit more so than others. Yes thorium could replace uranium, or SEFE could change the word with their patented design to capture naturally occurring atmospheric pressure. However, Uranium miners like URRE will continue to display high risk/reward characteristics.
Bottom Line: According to the IAEA, roughly 170 million pounds of uranium was consumed in 2011, yet only 140 million pounds produced. Imagine if the nuclear reactor in Japan didn’t go all Homer Simpson on us what affect it would have had on companies like Uranium Resources.
Add URRE to your list of penny stocks to watch and look for their May 11 earnings release. Worldwide use of nuclear energy could jump as much as 100% in the next 20 years, according to the IAEA. URRE is in a position of share price weakness which long speculators could make an absolute killing on this penny stock.