Buy Cameco Corporation Now, or You’ll Regret it Later

Cameco Corporation’s (TSX:CCO)(NYSE:CCJ) next bull run could be underway. Here is why you should consider buying the stock right now.

| More on:
The Motley Fool

The last bull run in uranium prices resulted in Cameco Corporation’s (TSX: CCO)(NYSE: CCJ) stock nearly tripling, but these gains evaporated, with the stock crashing in the aftermath of the 2011 Fukushima nuclear disaster.

Since the disaster, the stock has been underpinned by the dark cloud hanging over the future of the uranium market, but now, recent changes mean that uranium demand is about to recover, taking Cameco’s stock with it. With the stock currently trading at such a low level, and with the future demand for uranium looking promising, it is very likely that Cameco’s stock can repeat its past performance in the upcoming bull run.

The recent resurgence in uranium’s price was due to the news that Japan is moving to restart its nuclear reactors as early as next year, after shutting them following the nuclear disaster. When the news hit, Cameco’s stock jumped almost 10%, giving a small amount insight into what is ahead for Cameco as uranium’s demand starts to pick up.

Quick rebound could be in store

Uranium’s rout following the nuclear disaster was due to a fundamental, physical decrease in uranium demand as well as the negative sentiment surrounding the future of the use of uranium as a fuel. In the years since the disaster it has become apparent that uranium has a crucial component in many countries energy supplies, and as countries move to produce more energy with less pollution, uranium demand will only increase.

The uranium market could have a very quick reversal, with forecasts that a shortage will emerge as soon as 2018. The shortage will be a result of the increased demand while constrained supplies will also be a factor. By 2020 China alone plans to triple its use of uranium as a fuel. At the same time, the crash in prices has greatly altered uranium’s supply chain. Prices fell far enough that they were well below the cost of production, forcing many smaller miners to mothball production. 

Cameco, however, has kept its doors opened and is positioned to profit from this resurgence in uranium demand and increased prices. With less competition and forecasts for robust future demand, Cameco stock could very easily eclipse its past performance, and the bull run could already be underway.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Leia Klingel has no position in any stocks mentioned.

More on Metals and Mining Stocks

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Stocks for Beginners

Cameco Stock and More: 3 TSX Commodity Titans to Watch in 2024

Cameco stock and these others will provide you with growth that goes beyond just a year or two, with all…

Read more »

Handwriting text writing Are You Ready For Tomorrow question. Concept meaning Preparation to the future Motivation Stand blackboard with white words behind blurry blue paper lobs woody floor.
Stocks for Beginners

3 Reasons to Buy Lundin Stock Like There’s No Tomorrow

Lundin stock (TSX:LUN) has been killing its production of copper and plans on blowing its records out of the water…

Read more »

Gold bars
Stocks for Beginners

TSX Materials in March 2024: The Best Stock to Buy Right Now

Materials have been quite volatile, though the price of gold has surged to all-time highs. That makes this stock a…

Read more »

Gold bars
Metals and Mining Stocks

Will Gold Stocks Rally in 2024?

Down almost 30% from all-time highs, Franco-Nevada is a gold mining stock trading at a discount to consensus price target…

Read more »

A miner down a mine shaft
Stocks for Beginners

Canadian Mining Stocks: Buy, Sell or Hold?

Canadian mining stocks have seemed like such a strong investment, but with shares down significantly this year, what should we…

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Stocks for Beginners

Great News for Gold Stock Investors!

Gold has hit an all-time high! Which is good news for some gold stocks, and really good news for others.

Read more »