Nuclear power has become one of the top ways countries around the world are transitioning to clean power. While it isn’t likely to be the only source of power, uranium is likely to be a main source that will continue to see massive growth in the next decade or so.
One of the top choices investors have therefore been eyeing is Cameco (TSX: CCO). Cameco stock is one of the world’s largest uranium providers, with shares climbing higher over the last decade. That being said, there has been more near-term volatility lately. So, does that mean now is a good time for investors to jump in on the stock?
Source: Getty Images
Cameco stock: Room to run?
Cameco stock has seen incredible growth in the last year, with shares up 42% as of writing. That being said, it hasn’t been a smooth ride. Shares have climbed and fallen several times in the last year alone. This has led investors to perhaps not want to risk the investment, given the stock’s volatility.
However, analysts now believe uranium stocks such as Cameco stock are looking more attractive than ever. Even during this volatile market, the company has managed to climb higher and higher. Further, the price of uranium is also expected to continue climbing, reaching about US$75 per pound by the end of 2025, according to the Bank of America.
What’s more, recent history has also seen a climb in uranium prices. This includes the invasion of Ukraine by Russia, leading to an even tighter market. Furthermore, countries putting sanctions on Russia have been trying to create their own clean energy to get away from dependency on Russian resources. This has led to an even higher demand for uranium. So, it certainly looks like there is room to run for Cameco stock and other uranium providers.
Why Cameco stock?
Cameco stock has been through a lot over the last decade and a bit. It survived the collapse of nuclear power that occurred after the tragic Fukushima disaster in 2011. This led to a collapse in share price that the company then had to wade through and reach the other side.
And a decade later, it seems as though it had. By 2021, President Biden announced nuclear power would be a major part of the transition to clean energy. Nuclear energy already supports 20% of the power used by Americans at present, so that number is set only to grow.
It looks as though Cameco stock should grow right along as well. The company has been making major partnerships to expand its operations yet continues to have a strong balance sheet. It now has about US$3.3 billion in assets, which is just about double what it had back in 2019.
Bottom line
While analysts continue to recommend it as a strong buy, it’s important to note that it trades just below the consensus target price. Therefore, should another dip come alone, it might be an opportune time to pick up the uranium stock. Then hold on tight to Cameco stock for at least the next decade, when its shares could provide the power behind your own portfolio.
