Why Uranium Energy Stock Popped Today

Uranium Energy (NYSEMKT: UEC) stock eked out a 2.1% gain through 3 p.m. ET Tuesday after RBC Capital analyst Andrew Wong initiated coverage of its rival, Littleton, Colo.-based uranium miner Ur-Energy (NYSEMKT: URG).

There was no other notable news to explain Uranium Energy's move, not even a spike in uranium prices -- which are actually down slightly today.

RBC loves Ur-Energy

RBC's Wong likes the prospects for nuclear power use in the U.S., and especially likes companies that provide reliable uranium supply to the U.S. As a U.S.-based uranium producer, Ur-Energy fits this bill.

So, too, does Corpus Christi, Tex.-based Uranium Energy.

What this means for Uranium Energy stock

RBC hasn't yet endorsed Uranium Energy stock, but investors may be betting that interest in Ur-Energy could put Uranium Energy on the analyst's radar as well. According to data from S&P Global Market Intelligence, the two companies share similarities -- with Uranium Energy modestly more attractive as an investment.

Both companies generate revenue -- $20 million over the past 12 months for Uranium Energy; $31 million for Ur-Energy. Neither is currently profitable, with Uranium Energy last reporting a profit in 2022 and Ur-Energy in 2018. Both companies are burning cash, but net cash-positive on their balance sheets to absorb the losses, with Uranium Energy possessing significantly more cash than Ur-Energy -- $488 million versus only $2 million in debt.

At its current cash burn rate of about $120 million per year, that gives Uranium Energy four more years to prove it can build a viable business model. And the best news of all?

Most analysts agree Uranium Energy will move much faster than that, turning both profitable and free cash flow-positive next year. Of the two uranium stocks, Uranium Energy seems the safer bet.

Rich Smith 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.