An ASX share to buy before it reboundsThe company in question is...

An ASX share to buy before it rebounds

The company in question is S&P/ASX 200 Index (ASX: XJO) uranium shareBoss Energy Ltd (ASX: BOE).

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Boss Energy PriceZoom1M3M6MYTD1Y5Y10YALL16 Sep 2019→10 Sep 2024202020212022202320242020202020222022202420240246www.********.au

Boss Energy joined the top ten most shorted ASX 200 shares this week, with short interest standing at 9.5%.

Indeed, with uranium prices trading around US$79.50 a pound, at 10-month lows, two other ASX uranium stocks came in at number 11 and number 12 on this rather ignominious list.

This tells me that rather than buying this ASX share, many short sellers are likely betting against it based on their outlook for uranium prices. After all, it was only back in February that the radioactive metal was trading at 16-year highs of US$106 a pound.

Addressing the macro picture first, I believe short-selling Boss Energy rather than buying the ASX share could backfire in the short term and is even more likely to prove a mistake in the long term.

The nuclear renaissance we're seeing among many major economies – including the United States, China, India, Japan, France and a host of other nations that pledged to triple their nuclear power capacity by 2050 – hasn't gone away.

With some 58 new nuclear reactors currently under construction, the medium to long-term uranium demand remains quite strong. And I am talking quite long-term here.

According to the World Nuclear Association, global uranium demand will likely exceed global supply through to 2040.

As for why I'd specifically buy this ASX share despite the heavy short position, I believe Boss Energy is well placed to outperform in the year ahead.

On 22 April, the ASX 200 uranium stock announced the production of its first drum of uranium at Honeymoon. In July and August, Boss Energy produced 72,516 pounds of the nuclear fuel.

And with commissioning and ramp-up to steady-state production proceeding according to plan, the cost per pound of producing that uranium is going to fall.

"We continue to meet or exceed all of our key targets and are comfortably on track to meet our production guidance," Boss Energy managing director Duncan Craib said last week.

Boss Energy is forecasting Honeymoon production of at least 850,000 pounds of uranium in FY 2025.

And the balance sheet is solid. The ASX 200 uranium stock reported liquid assets of $273 million and no debt as at 30 June.

With the Boss Energy share price down 39% in 2024, closing yesterday at $2.61 a share, buying this ASX share today could deliver some outsized gains in the year ahead.

How outsized?

Well, according to Bell Potter, potentially more than 118%.

Bell Potter recently reaffirmed its buy rating on Boss Energy with a target price of $5.70 a share.

So, this is one heavily shorted ASX share I'd buy today before that potential rally picks up steam.