Is the Paladin Energy share price overcooked at $17.40?

Have Paladin Energy shares climbed too high?

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The Paladin Energy Ltd (ASX: PDN) share price has been on quite the run of late. Today, this ASX 200 uranium stock is trading at $17.40, down a hefty 2.28% for the day thus far.

But even so, Paladin shares still remain up a huge 72.2% over just 2024 to date. This company has also put on a whopping 163.5% over just the past 12 months.

Longer-term investors have done better again still. It was only back in March of 2020 that Paladin shares were as low as 39 cents a pop. This means that investors who have held this company since then have enjoyed a gain worth a jaw-dropping 4,400% or so.

Check all of that out for yourself here:

It's probably fair to say that Paladin's gains, particularly over the past year or two, have been fuelled by a surge in the price of uranium itself, as well as a belief that prices could go higher still as the world looks for low-carbon sources of energy in the coming years.

But all of these gains for the Paladin share price, massive as they may be, are now in the past. So after this extraordinary runup to the share price we see today, some investors might be wondering whether Paladin shares might be a little overcooked. After all, these kinds of explosive rises are rare on the ASX, and all commodity-based companies are notoriously cyclical in nature.

Is the Paladin Energy share price overcooked at current levels?

Unfortunately for Paladin bulls, at least one ASX expert reckons this is indeed the case today.

According to reporting in the Australian Financial Review (AFR) this week, Dawn Kanelleas of First Sentier Investments is telling investors that her funds are avoiding uranium stocks, and Paladin Energy in particular.

Kanelleasis is worried about the fundamental quality of Paladin and thinks its valuation has become stretched. Here's some of what she said:

We don't have comfort around the cost structure of both [Boss Energy Ltd (ASX: BOE)] and particularly Paladin, given its history – it makes it hard to confidently invest at this point…

[Paladin] has a $5 billion market cap and no earnings right now. Even though prices might be high, contracted prices are much lower … we're very wary of that mine.

Kanelleasisis is instead more interested in another commodity that has boomed in recent months – gold. She named gold miner Capricorn Metals Ltd (ASX: CMM) as one of her picks right now.

Unfortunately for Paladin Energy investors, the pessimism doesn't end with First Sentier Investments. Earlier this month, my Fool colleague James covered the views of several ASX brokers on the Paladin Energy share price. He found that "most brokers now believe that the Paladin Energy share price has peaked or is close to peaking".

These brokers didn't have as much of an issue with Paladin's underlying quality, as Kanelleasisis did. However, their collective share price targets on the company don't imply much upside from where the shares are currently trading.

Motley Fool contributor Sebastian Bowen has no position 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 Scott Phillips.

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