Could These 2 Stocks Double in 2015?

Barrick Gold Corp. (TSX:ABX)(NYSE:ABX) and Cameco Corporation (TSX:CCO)(NYSE:CCJ) are two battered stocks that could see significant upside, but how quickly will these gains start?

| More on:
The Motley Fool

Overall, 2014 was a good year for the markets, but there are some notable exceptions, particularly when it comes to commodities companies.

Barrick Gold Corp. (TSX:ABX)(NYSE:ABX), for one, is down about 23% over the past 52 weeks, and that includes the 26% it has gained since the start of 2015. Cameco Corporation (TSX:CCO)(NYSE:CCO) is another stock that has been battered over the past 52 weeks, declining 28.8%; 6% of those losses were experienced since the start of 2015.

If you want to make money investing you have to buy stocks when they are relatively low. Unfortunately, this is easier said than done. When stocks are under pressure, there is a reason for it, and this reason usually scares most investors off. While it is basically impossible to predict the low point for any stock, these two companies have a great near and longer-term picture, even though 2014 was a year that both these companies would rather forget.

Barrick Gold Corp.

Barrick Gold has already added 26% to its value this year, and I believe that there are even more gains in store. 2014 was not a good year for the gold miners as a whole, and this year the gold market has already improved, and should continue to. We have already seen a fundamental shift in the gold market this year as gold has managed to post gains even with a higher U.S. dollar thanks to increased safe haven demand.

Barrick should see gains on the fact alone that gold is recovering. It saw a greater sell-off than many of the gold miners when gold went through its last price rout because the company was not in a good financial position. As gold collapsed, the miner was forced to take some major write-downs and slash its dividend.

Now, the company has worked hard to improve its financial position. Is it the most financially sound of the gold miners? No. But the sell-off in the stock is reflective in the price crash and with the improved gold market and Barrick’s improved financial position, this company is well positioned to experience some steady gains this year. Given the current political and economic climate, Barrick Gold will likely see a steady improvement, but expecting the stock to double may be far fetched. It could happen, but likely would take some very intense political or economic upheaval. 

Cameco Corporation

It was not just 2014 that was a rough year for Cameco Corporation. The company has had a tough time since 2011 when the Fukushima natural disaster put the future of nuclear power into question. Now, as time has gone on, nerves about the use of nuclear power have calmed as it has become clear that it is irreplaceable as a power source. In the future many countries around the world, particularly China, will increase the amount of nuclear power they use, thanks to the fact that it is relatively environmentally friendly to use uranium compared to other power sources, such as coal.

In fact analysts are already prepared for a rapid increase in nuclear capacity starting now and going forward. According to the World Nuclear Association, China will increase nuclear capacity to 58 GWe by 2020 and India will add up 30 new reactors by 2030.

Cameco is well positioned to benefit from the oncoming nuclear renaissance. The stock may remain under pressure for now, but things have been fundamentally shifting for some time. Analysts have commented that the spot market is tightening as inventories are drawn down and production is nowhere near being back to pre-Fukushima disaster levels. This means that over the short-term uranium prices could be choppy and Cameco stock could see some spikes. Over the longer term its a no-brainer that uranium demand will increase to fuel nuclear power plants and Cameco will profit.

I expect in the future that Cameco stock will once again hit its glory days level of almost $60 per share, about triple its current going rate. How quickly the recovery happens will depend on how soon nuclear capacity ramps up and how cautious uranium producers are about increasing production.

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 Investing

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

edit Sale sign, value, discount
Stocks for Beginners

These 3 Growth Stocks Are on Sale and Set to Surge

Some growth stocks are on sale right now that offer massive long-term potential for investors. Here's a trio to consider…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Why Canopy Growth Stock Could Double in 2024

Canopy Growth (TSX:WEED) stock saw its share more than double in the last two weeks. So, can it do it…

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »