Here’s why the Alligator Energy (ASX:AGE) share price leapt 113% this past week

Alligator Energy shares cap off an outsized week. Here’s the details.

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jump in asx share price represented by man leaping up from one wooden pillar to the next

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The Alligator Energy Ltd (ASX: AGE) share price is on fire this past week and finished Friday’s session at 11.5 cents each.

Over the last 7 days, Alligator Energy’s shares have climbed 113%, extending their gain over the past month to 342%.

In fact, if you zoom out a bit and look at Alligator’s share price chart since mid-August, you’ll see what looks like a hockey stick – with a handle that’s climbed until today.

Let’s take a look at what’s at play here.

What’s fuelling the Alligator Energy share price lately?

There are 2 main factors driving these impressive returns for Alligator Energy shareholders in the near term. First is a key update and the second being the price of uranium. Let’s cover the key update first.

In the announcement made earlier today, Alligator outlined several “updates for its projects and team”. These cover the company’s key uranium projects and some corporate news.

Specifically, the projects in question are the Samphire Uranium Project, Alligator Rivers Uranium Province – Nabarlek North Project and Big Lake Uranium. Investors can find more detailed progress for each site individually on the company’s announcement.

The second major catalyst pushing the Alligator Energy share price higher today is the prices that uranium is fetching in the spot commodity markets.

The price of uranium has skyrocketed from US$30/lbs to just shy of US$50 per pound since 16 August. That’s a 65% increase in just one month.

Checking this with Alligator’s share price chart, it’s clear to see that it made its jump from the same time as the giant move in uranium pricing – in mid-August.

This makes sense because Alligator Energy is an ASX resource share that produces a commodity – in this case, uranium – and therefore it is considered a price taker. As such, its share price can and does fluctuate with volatility in the broader commodity markets.

Given this relationship and the fact that uranium prices are just short of reaching 10-year highs, it starts to make sense why the Alligator Energy share price has stormed higher this week.

Alligator Energy share price snapshot

The Alligator Energy share price has been a major performer on the ASX this year to date and has posted a mammoth return of 945%.

What’s more, is that over the past 12 months, it has increased by a whopping 2,200%. However, it’s important to check absolute values as well as percentages in finance.

Doing so we see that the Alligator Energy share price has increased from $0.005 (0.5 cents) to 11.5 cents over the past year – a gain of 10 cents per share.

Nonetheless, speculative investors who banked on Alligator Energy this time last year are enjoying a significant return over the S&P/ASX 200 index (ASX: XJO)’s gain of around 15% in that time.

Should you invest $1,000 in Alligator Energy right now?

Before you consider Alligator Energy, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Alligator Energy wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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