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

Bank sign on traditional europe building facade
Bank Stocks

Is Now the Right Time to Buy Canadian Bank Stocks?

Some bank stocks, like Toronto-Dominion Bank (TSX:TD) are doing well; others, not so much. Is it time to buy bank…

Read more »

A worker uses a laptop inside a restaurant.
Tech Stocks

2 Promising Growth Stocks to Buy in December 2022

Growth investors had better act fast, because these fire-sale prices won’t last forever. Here are two discounted growth stocks to…

Read more »

Electricity high voltage pole and sky
Dividend Stocks

Should You Buy Algonquin Stock Now or Wait?

Algonquin Power stock has a massive 9.8% dividend yield today! Is now the time to buy or should income investors…

Read more »

A worker gives a business presentation.
Bank Stocks

BMO Stock Rose 6% in November: Is it a Buy Today?

Is it time to buy BMO stock?

Read more »

tsx today
Energy Stocks

TSX Today: Stocks to Watch on Monday, December 5

Canadian stocks may remain volatile ahead of the Bank of Canada’s upcoming interest rate decision due on Wednesday.

Read more »

Double exposure of a businessman and stairs - Business Success Concept

Better Buy: RBC Stock or the Entire TSX?

Royal Bank of Canada (TSX:RY) is a robust stock, but the index fund could be better long term.

Read more »

Family relationship with bond and care

Retirees: 2 Top TSX Dividend Stocks to Buy for TFSA Passive Income

Top TSX dividend stocks now trade at discounted prices for TFSA investors seeking passive income.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Metals and Mining Stocks

Beat the TSX With This Unstoppable Dividend Stock

This dividend stock continues to outpace the TSX and then some, providing you with a dividend that you'll want to…

Read more »