Cameco Stock Is Approaching its 52-Week High: Time to Invest?

Cameco (TSX:CCO) stock is nearing 52-week highs once more after falling from September last year, but should you wait for another dip?

| More on:
A worker wears a hard hat outside a mining operation.

Source: Getty Images

Cameco (TSX:CCO) has seen its shares rise higher and higher after going through a horrid roller coaster of share movement in the last year. Yet now, Cameco stock is approaching its 52-week high once more. Should investors jump in or expect more of the same in 2023?

What happened?

Why the roller coaster? Cameco stock received more attention during the last several years for a few reasons. First, there was the shift towards more clean energy use. This means using uranium power for reactors, reactors that span the globe and are being created in bulk.

As the world’s largest publicly traded uranium producer, Cameco stock has an incredible amount of growth — especially now that Japan has started allowing reactors once more, there’s even more movement towards uranium power in the near and long term.

In fact, about 20% of America’s power alone is powered by uranium through reactors as we speak. And the price of uranium is only going higher. So, why did the stock drop?

Those meme traders

With the price pushing higher, Cameco stock and uranium stocks in general caught the attention of retail and meme stock investors. Because of this, Cameco stock was fueled for a selloff. After soaring upwards, the stock then came crashing down — and for no reasonable purpose.

So, in September 2022, shares of Cameco finally recovered and reached heights not seen since pre-Fukushima. Yet again, afterwards shares started to drop off with the market decreasing in bulk. By December, shares were down 27% from those September highs.

Yet since that time, shares are back up by 26% as of writing. This is all based on optimism, in the opinion of some analysts. Optimism about the near future of nuclear power. And they’re right! Nuclear power is going to be huge in the next decade. We need uranium to transition away from fuel and towards renewable energy.

Now, but not forever

Here’s the thing: you could absolutely invest in Cameco stock right now and see shares continue to climb. It most certainly is overvalued at this point, but I still believe its outlook is strong. There is just so much need for uranium at this point, and Cameco stock is going to have to find every means to keep up.

Granted, it’s doing this. It’s created a partnership with Brookfield Renewable Partners, which will provide more revenue, and diversified revenue, at that. So, cash is certainly coming in during the next several years.

But, as I mentioned, the key is that it’s not a renewable stock. Uranium is a finite resource, and eventually, we will need to transition towards other means of energy production. So, over the next decade, Cameco stock is likely to do well, but it’s not a forever hold.

Bottom line

Cameco stock is nearing 52-week highs, and it’s likely to hit those heights once more. However, this could trigger yet another sell off similar to what we’ve seen over the last year or so. In that case, it might be best to wait to purchase the stock to receive more of a boost.

That being said, if you’re looking for a stock to buy and hold, which is always recommended, Cameco stock may not be your best choice. While it could do well during the next few years, it’s just not looking likely to be the focus another decade after that.

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 Amy Legate-Wolfe has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

More on Metals and Mining Stocks

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Wednesday, March 29

Corporate earnings and banking sector updates could give further direction to TSX stocks today.

Read more »

Gold bullion on a chart
Metals and Mining Stocks

3 Gold Stocks to Buy as the Materials Sector Rallies

Three gold stocks have surged from 9% to as high as 30% in the last 30 days as the materials…

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Tuesday, March 28

Besides new developments related to the ongoing banking turmoil, TSX investors may want to closely monitor the U.S. consumer confidence…

Read more »

stock market
Metals and Mining Stocks

2 TSX Mining Stocks to Buy as Gold Prices Surge Past $2,000

Bullish on gold? Investing in quality mining and royalty stocks such as Barrick Gold is a solid bet in 2023.

Read more »

Metals and Mining Stocks

Better Metals Buy: Gold Stocks vs. Lithium Stocks

Gold is the evergreen choice as a hedge against inflation and weak markets. In contrast, battery metals may offer unique…

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Wednesday, March 22

The Federal Reserve’s interest rate decision and economic projections are likely to keep the TSX highly volatile today.

Read more »

gold stocks gold mining
Metals and Mining Stocks

Gold Stocks Are Gaining Steam: Are They a Buy at Current Prices?

Gold stocks will likely steal the limelight this year, making up for their last year's underperformance.

Read more »

edit Sale sign, value, discount
Energy Stocks

2 Cheap Canadian Stocks You Can Buy for Less Than $50

You can buy Suncor Energy stock, and this gold stock at cheap valuations today

Read more »