Cameco Stock Is up 92% This Year: Is it Still a Buy?

Cameco (TSX:CCO) stock could have more room to run, as nuclear power experiences a massive comeback.

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Shares of Canadian uranium producer Cameco (TSX:CCO) have been one of the hottest stocks in 2023, with 92% in gains posted year to date. Undoubtedly, the Canadian firm is viewed as the go-to uranium play by many folks, not just in Canada but around the world.

Amid the stock’s epic ascent, many analysts have stuck by the name, including RBC Capital’s Andrew Wong, who recently stated that the firm is “set to become a leading player in the nuclear industry.” That’s a big deal and a huge vote of confidence that helped give those red-hot shares of Cameco another jolt.

There’s no question that many nations are looking to nuclear energy again as a way to produce massive amounts of energy without a considerable magnitude of air pollution. Over the next decade, Cameco could be riding on the right side of a secular tailwind that could drive uranium prices higher from current levels.

Cameco stock’s recent momentum is incredible as uranium prices surge

Either way, the recent momentum in Cameco stock is difficult to ignore, especially if you’re looking to further diversify your portfolio with commodity plays. Over the next decade, advancements in safety technologies could help nuclear power plants improve their safety track records and further minimize the chance of nuclear meltdowns, which could cause many to look away from nuclear energy for many years.

At this juncture, I think it’s hard to bet against Cameco. It’s a world-class producer and one that could widen the gap with global rivals. Uranium prices recently touched multi-decade highs. But that is not the only reason to look at Cameco as a potential long-term investment. Unlike oil or precious metal producers, there aren’t really that many uranium producers.

With a diversified geographical footprint and many years of top-notch expertise, I view Cameco as one of the commodity producers that has a remarkably wide moat. Indeed, commodities and moats don’t often mix. But when it comes to Cameco, I think the firm is a must-own for those seeking to play the future of nuclear energy.

With numerous international nuclear projects to come online over the next year, I would not be surprised if uranium prices move even higher from here. Cameco stock has awakened after many years of hibernation. And savvy investors may wish to nibble away at any small bumps in the road that appear between now and next year’s end.

What about valuation?

Of course, Cameco stock is a tad on the pricey side after such a glorious bull run. Still, shares don’t seem all too absurdly valued when you consider it’s one of the leaders in the industry.

The stock trades at more than 100 times trailing price to earnings, which while lofty, isn’t as lofty as it could be if the right cards continue to fall into place. All considered, I still view Cameco as a worthy value play at north of $60 per share.

The Foolish bottom line on CCO stock

Cameco stock has been hot of late, but the good times could keep rolling into the new year. Uranium prices may still have room to run. And that could add more rally fuel to the tank for CCO stock.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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