If there are two companies set to make huge strides in the renewable energy sector in the next few years, it’s Cameco (TSX:CCO) and Brookfield Renewable Partners LP (TSX:BEP.UN). In fact, the pair have entered into a partnership over the last year. But when it comes to which is the better buy, who comes out on top?
Let’s first look at Cameco stock. Over the last few years shares of the nuclear power provider have exploded. It continues to be the world’s largest publicly traded uranium producer. Moreover, it has masses of reserves in uranium that haven’t even been put on the market yet!
This is all part of the company’s plan. But let me first start with why. Cameco stock went through a major drop in the last decade after the Fukushima Power Plant disaster in 2011. The tragedy left many dead, leading to a drop in everything nuclear.
Yet in the last few years, more and more investment has gone into renewable energy. What’s more, 20% of the United States has been powered by nuclear power in the past. That’s only set to grow with President Joe Biden committing to more nuclear plants. However, it’s not just the U.S. where Cameco has seen growth.
Around the world nuclear power plants are starting up, or being built. This tried-and-true method of producing energy may have had a tumultuous past, but governments are more positive about the near future. That’s why Cameco stock also potentially has a future filled with returns.
That’s not to say, however, that Brookfield stock doesn’t have just as strong of a future. While shares are certainly down, I still wouldn’t count out the stock. The key here is that the company tends to grow through acquisitions and less through organic means. This can create large upfront costs, ones that eventually need to be paid off.
This has created a present problem, but not a future one. The company will eventually pay all this down, and when it does will have a vast set of assets that spans every type of renewable energy project! That includes nuclear power. As I mentioned, the company partnered with Cameco stock to create more nuclear power projects.
The benefit of Brookfield stock is it should also provide long-term results as well. The company is strong in that it holds this diverse set of assets. Not just one type. And to be fair, nuclear power is great for now, but perhaps not in the next decade. After all, we still have to mine for uranium. This could end up creating another problem for governments down the road.
So which is it? Cameco stock currently trades up 67% in the last year alone, with investments continuing to pour in. Brookfield stock trades down 21%, with investors still wary about the immediate future of the stock and its debts. So, perhaps wait on both.
Cameco stock needs more of a dip to create medium- or short-term interest. And Brookfield stock needs to pay down debts before adding more investors on. When these two points happen, however, you could be looking at substantial short-, medium- and long-term results.