And off the radar EME certainly is.
But that is where the opportunity lies and why I have been slowly accumulating as much as I can here over the last 12 months. The valuation of EME is astounding at these levels with an EV of A$5m when the uranium fundamentals are so strong.
This valuation disconnect is most pronounced when looking at the chart of EME relative to the uranium price over the last 5 years. I will run through some examples of previous points in time and what the EME share price would have to trade at to get back to that valuation.
March 2020 Covid lowsThe covid lows were a time in which most uranium stocks bottomed in the charts relative to the uranium price and viewed as a point of deep value in the uranium stocks, but for EME the share price would need to double to $A0.154 just to get back to this relative valuation.
November 2020This was a pivotal month just before a lot of uranium stocks explosively broke out from their decade long downtrends e.g. Bannerman going up 3x from Nov 2020 to Jan 2021 and is often referenced as a point in time that uranium stock were extremely undervalued. To get back to this valuation the share price would need to go up 260% to A$0.28.
Sept/Oct 2021For many stocks this was the period of peak valuation for uranium stocks relative to the uranium price and is a good yard stick for recent bull market valuations. To get back to this valuation EME would need to go up 10x to A$0.77.
Note: All of these relative valuations are assuming the uranium price stays the same and if it increases this would require further EME share price increases to achieve the same relative valuations in the examples above.
There are a lot of uranium companies that have under-performed relative to the uranium price and have similar charts to the one of EME above e.g. PEN and TOE, but what is unique about EME, is there has been no stock dilution over this period and I am not expecting dilution here anytime soon.
