NexGen Energy Ltd. (NXE:NYSE)
Price at Preparation: $7.92 (Nov 18th, 2024)
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What they do
NexGen Energy Ltd. (NXE:NYSE) is a Canadian company focused on delivering clean energy fuel for the future. It is engaged in the acquisition, exploration and evaluation and development of uranium properties in Canada. It is focused on optimally developing the Rook I Project. It has a portfolio of highly prospective projects, including its 100% owned Rook I property that is host to the high-grade Arrow Deposit, South Arrow, Harpoon, Bow, and the Cannon area. The Rook I Project is a development-stage uranium project in Canada. The new underground mine and mill development is located in the uranium-rich district of the southwestern area of the Athabasca Basin, located in Saskatchewan. Arrow is a 100% land-based, basement-hosted, and high-grade uranium discovery.
Welcome back to Theta Bandits Top Pick Tuesday, where we search the markets to bring you fresh ideas that could be a potential winner in any portfolio.
Opinion
Uranium has been a commodity of interest in recent months for the development of clean energy through power stations in several countries and in the development of next generation Small Modular Reactors (SMR). One such use case for this this technology is powering data centers for the likes of Amazon, Microsoft and Google. These are examples of companies that are preparing for an increase in power usage due to the extra compute power needed to accommodate future AI requirements. Given this is preparation, this is an idea that could be part of a portfolio for years to come.
NexGen Energy Ltd (NXE:NYSE) is one of the players to provide materials in the race to harness this power source. While NXE is not a large-cap producer, the small- and mid-cap producers do provide investors with more leverage through a more affordable price level to take advantage of price action.
The analyst street consensus is bullish with 15 Buys, 0 Holds, 0 Sells and 12-Month Price Targets (PT) as follows:
- Low: $7.10 USD (-10.41%)
- Average: $9.18 USD (+15.89%)
- High: $14.90 USD (+88.15%)
Plan
As usual, find the chart below with following colors:
- Blue: 52-week high.
- Red: 52-week low.
- Green: 12 Month PTs (high / avg / low).
- Orange: Support/resistance lines.
- Yellow: Our plan.
As mentioned in the opinion section above, this could be an investment for the future, not just a trade “in the short term”. However, those familiar with our methods know we like to mitigate risk on everything. This can be achieved by securing as much of the original investment as possible, until there are only profits remaining to do the heavy lifting for the remainder of the trade – risk free!
In the chart below, we have identified a pattern called a cup and handle (in yellow), and usually the patterns follow similar trends unless there are unforeseen forces that play havoc with the market. Usually once the cup completes, there is a pull back (handle) and when the handle is complete the stock will move up as indicated. Following this pattern, it appears that the stock price has completed the handle and is starting to move up. Targets have been set at $8.62 USD, $8.88 USD and $9.18 USD to secure partial profits on this trade and mitigate some risk on the trade. As a bonus, the 12-month Price Target (high) is $14.90 USD which may be hit in time. There are fairly strong resistance points at the target levels, please make sure to use and update stop-losses to protect the initial investment.
This is only one method how to trade this movement. We discuss other potential methods to attack this stock through our discord server and we will discuss this trade live IF you sign up to attend our weekly Theta Bandits Webinar – When we trade together, we learn together!
RISKS
The goal is to grow capital by securing profits along the way and limiting losses. Make sure to plan to trade within your risk tolerance, allowing time for success while updating limits and exit points to mitigate risk.
If you’ve been finding our picks helpful, imagine what trading live holds. You know what to do 👇
Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.
