If you have been thinking about gaining exposure to the uranium industry, then now could be the time to do it.
That's because Bell Potter believes that one ASX 200 uranium stock could be destined to double in value over the next 12 months.
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Which ASX 200 uranium stock?
The stock in question is Boss Energy Ltd (ASX: BOE).
It is a uranium company that owns the Honeymoon project in South Australia.
This project recently commenced production after being on care and maintenance since it was acquired by the ASX 200 uranium stock back in 2015.
In addition to Honeymoon, Boss Energy holds a 30% interest in the Alta Mesa ISR project in South Texas. The remaining 70% is owned and operated by enCore Energy (NASDAQ: EU).
What is the broker saying?
Bell Potter has been looking over the company's recent half year results, which revealed significantly higher than expected costs. However, the broker highlights that this number isn't quite how it first appears. It explains:
BOE recorded revenue of $47.8m (BPe $48.1m) and operating costs of $48.1 (BPe $22m). The primary reason for the difference is an accounting treatment on the sale of inventory (0.4Mlbs), which is measured (for a COGS purpose) at fair value rather than at cost (BOE purchased the inventory at US$30.15/lb vs the average unit cost applied in the results of ~US$77/lb). […] The overall result was a 1HFY25 loss of $9.5m vs BPe profit of $12.2m.
Operating cash flow was $17.5m, which provides a better indication of the underlying business in our opinion. Receipts from customers were $48.6m on costs of $30.1m. Payments for mine development (Honeymoon and Alta Mesa) were $19.1m, plant and equipment expenditure was $2.9m and net cash declined by $1.9m to close at $65m. Liquidity (cash + uranium inventory + listed investments) was $251m.
'Material discount'
In light of the above, the broker remains very positive on the ASX 200 uranium stock and has retained its buy rating with a trimmed price target of $4.80 (from $4.85).
Based on the current Boss Energy share price of $2.38, this implies potential upside of 102% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
We maintain the view that BOE is trading at a material discount for a resources company with a stable balance sheet and beginning to generate stable cashflow. A successful 3QFY25 result and updated Mineral Resource Estimate for satellite deposits over the next two months remain key catalysts for a re-rate in our opinion.
