A stock name that frequently gets mentioned in the debate about how to best trade clean energy is Westwater Resources (WWR). Uranium miners and copper stocks are immediately associated with a move to non-carbon power and battery-based energy.
WWR offers another angle into the same seismic shift being undertaken by the global economy. The graphite that Westwater mines and sells is a key component of the renewable energy sector, but it’s an exceptionally volatile market with high levels of risk-return.
YOUR CAPITAL IS AT RISK
This Westwater Resources stock prediction will use technical and fundamental analysis to consider the company’s prospects in the short, medium and long term. It can be something of a rollercoaster ride, with the stock having a track record of almost doubling in price in the space of one trading session. It has also plummeted in value over a similar timeframe, and the long-term price action can only be described as bearish.
The Whether WWR stock is a buy or sell is a hard one to answer, and there is substantial market risk, the chance of price going against you, whether you are going long or short-selling the stock.
One risk that can be managed is operational risk, which relates to carrying out the act of trading as safely as possible and avoiding scammers.
Where Will The Westwater Resources Stock Price Be in 12 Months?
Westwater Resources investors who have held their position for years rather than months have had to endure a long-term decline in value. On a short-term basis, there are peaks and troughs that are large enough to encourage those with more speculative strategies to buy and sell WWR stock.
The October 2020 price spike saw WWR stock rise in value by an eye-watering 719% in the space of just 12 days. The February 2021 price spike was not as dramatic in nature but still demonstrates how the market can generate extreme returns for those asking if Westwater Resources is a good stock to buy. Both of these price points related to White House political initiatives to ring-fence the domestic supply of materials needed for battery production. Trying to predict what soundbites out of Washington might be in the pipeline is a high-risk strategy, but there is certainly potential for high price volatility to return to WWR at any time.
The RSI has previously been a relatively reliable signal for those looking to short WWR. The peaks in the indicator have been followed by sell-offs in the stock.
The potential to profit from downward price moves in WWR means that institutional investors and hedge funds are actively short-selling in the market. The list of firms that have previously bet against the WWR share price details names of prestigious hedge funds including Marshall Wace LLP, Jane Street Group LLC, UBS Group AG, Citadel Advisors LLC and Wolverine Trading LLC.
To establish the short-term prospects for WWR, it is important to look at what fundamental factors could trigger a price move. As with other commodity markets, short-term price moves in the graphite market are driven largely by changes in demand and political statements, such as those from the White House, that can cause a dramatic change in price. The supply side of the market takes months and years to adapt to any changes in demand because finding and developing mines is a multi-year project.
Global economic growth and the pace and extent of the electric vehicle EV roll out also come into play. However, until EV infrastructure is developed to an extent that there is a ‘tipping point’ moment in terms of adoption, then the graphite mined by Westwater Resources will be associated with potential rather than actual returns.
Overall, all eyes will be on the company’s progress regarding projects like the Coosa Graphite Project, the most advanced natural flake graphite project in the contiguous United States, and the associated Coosa Graphite Deposit located across 41,900 acres in east-central Alabama.
Westwater Resources News
February: WWR announced an additional increase in Phase I production to 12,500 mt per year of battery-grade natural graphite anode material.
February: The company announced the execution of its first off-take agreement with SK On, an electric vehicle battery manufacturer that supplies batteries to Ford, Hyundai, Volkswagen, and others.
Who Are Westwater Resources (WWR)?
Alabama-based Westwater Resources was founded in 1977 and is listed on the NYSE Arca under the ticker WWR. The firm is an explorer and developer of US-based mineral resources essential to clean energy production.
Restructuring projects have seen the company recently offload fringe business divisions such as those relating to uranium. Westwater now has a strong focus on exploring and extracting lithium and graphite. The firm aims to exploit a rise in demand of battery-related materials due to accelerating electric vehicle production, and with a lot of its assets based in North America, it offers a secure supply-line for US and Canada manufacturers.
Another competitive advantage the firm claims to have is its management team. The company website states that “our experienced staff and extensive technical expertise set us apart from our peers and provide a strong platform for energy minerals exploration and development.”
Source: WWR.
Westwater Resources' management team includes the following people:
- Frank Bakker, President, Chief Executive Officer & Director
- Steven M. Cates, Chief Financial Officer & Vice President-Finance
- Er Cevat, Chief Technology Officer
Westwater Resources Long-Term Forecast
Any Westwater Resources long-term stock forecast will be largely based on the effectiveness of the EV revolution and prospects for the firm tapping into its Alabama mining reserves.
EV expansion rates are tough to make a call on as politicians need to tread a balancing act between implementing new policies while not financially overburdening their citizens. Replacing the world’s fleet of vehicles is a costly business and even more so if it is rushed. Recently, demand for electric vehicles has declined, impacting the overall market.
The mining reserves question is also difficult to get a clear view of. Expect quarterly earnings updates to be times of higher price volatility because they’ll include assessments of when the firm’s Alabama graphite will come online. The technical elements of the mining industry mean analysing the situation may be beyond many non-specialist investors.
Is Westwater Resources a Good Buy?
Westwater Resources offers a way for investors to gain exposure to very popular trends. The graphite the firm mines is an integral part of the electric vehicle revolution, and thanks to US government guidelines, it is classified as a strategic natural resource.
From an investor standpoint, there are reasons to not buy WRR stock. The technical indicators offer few reasons for the current downward price patterns to not continue, and the fundamentals are challenged by the extended period of time until the firm’s major mining reserves come online.
Buying into WWR is a risky proposition. The firm has a market cap of only $107m. It’s not a firm with much weight to throw around in its dispute with the government of Turkey. The loss-making earnings per share number and negative cash flow reports are also a red flag. The bad news for Westwater is that although it’s possible to argue a business case for investing in the firm, particularly in the long term, there are more attractive candidates on any shortlist of the best renewable energy stocks.
