Cameco (TSX:CCO) continues to be the focus of many investors thinking the future lies with nuclear power. Cameco stock is the world’s largest publicly traded uranium company. It continues to make partnerships around the world, as we shift towards clean energy production.
The hype continued in the beginning of 2023, with Cameco stock rising 30% in the first two months of the year! However, shares have fallen back by about 9% in the last month alone, as of writing.
So, what should investors consider when thinking of investing in Cameco stock?
Let’s look at earnings
For a clue as to how Cameco stock is doing, let’s take a look at recent earnings reports. During its most recent report, the company achieved “record contracting” for long-term revenue and cash flow. The company added 80 million pounds for its long-term uranium contracts. Guidance for the next year is therefore quite positive, especially as the company is able to get its Cigar Lake production up and running once more as well as McArthur River and Key Lake.
Cameco stock is also quite positive. given its partnerships with many companies across the world for uranium production. This includes a strategic partnership with Brookfield Renewable Partners, with the pair jointly acquiring 100% of Westinghouse Electric Company.
Cameco stock still wasn’t positive about everything though, reporting a net loss of $15 million, and adjusted net earnings at $36 million for the fourth quarter. Still annual results were more positive, with net earnings at $89 million, and adjusted net earnings at $135 million. Revenue and profit rose, though net earnings from equity created a loss.
Analysts weigh in
Analysts were pleased by the results from Cameco stock, though they did lower their estimates. That being said, many believe the stock will continue to outperform in 2023. Though based on recent price movements, that may no longer look likely.
Even so, strong financial results reported achieved better-than-expected guidance, with far more long-term contracts than originally thought. Therefore, analysts believe this could be a strong investment at the very least in the near and medium term.
What about the long term?
This is where things get a bit tricky. In the near term, Cameco stock could certainly be a strong investment — especially if you’re looking for quick gains in the next several years. That being said, the company saw an immense rise in share price in the past that created volatility I wouldn’t wish on anyone.
And in the long term, it’s not a best-case scenario. While uranium is absolutely going to be a strong piece of the puzzle in transitioning to a clean energy future, it likely won’t last forever. The company is expanding quickly, because it has to. Its uranium reserves are being eaten up quickly. This could lead to an eventual problem with the world running on uranium, and no more uranium to power that future.
That could, therefore, lead to a crash in Cameco stock eventually. So, if you’re looking to set it and forget it, I’d say this isn’t the stock for you. However, medium-term investors that put a sell alert on their portfolio, may do quite well considering the company.
For now, Cameco stock looks quite expensive, even down 9% in the last month. I would perhaps wait until the market recovers to invest in this company once more.