Cameco (TSX:CCO) isn’t just another uranium miner to play the renaissance in clean nuclear energy; it’s a global leader that I believe deserves a scarcity premium. Undoubtedly, Cameco and other commodity titans can help improve your portfolio’s diversification.
Remember in 2022, when stocks were dragged down by the bear, with only a handful of commodity stocks that managed to rally in the face of market-wide fear? Indeed, the commodity plays can really fare well, even without as much help from Mr. Market.
Going into 2024, I expect the commodity plays could begin to heat up again hand in hand with the broader stock market averages. Indeed, there seem to be glimmers of value across the commodity scene. And in this piece, we’ll check out three (including Cameco) that I think could fare well for investors over the next two to three years.
Cameco is the uranium mining play to own if you’re looking to cash in on the coming nuclear renaissance, which could act as a long-lived secular tailwind for the uranium plays.
Indeed, many investors may view shares of CCO (or CCJ on the NYSE) as overvalued after rising more than 150% in the past two years. I believe the explosive gains are more than warranted; however, when you consider the dynamics that could jolt uranium prices over the second half of the decade.
Indeed, any commodity price can be impossible to project with a high degree of accuracy. That said, Cameco still stands out as a potential value play if you’re in the belief that nuclear energy will play a major part in powering big cities of the future.
Undoubtedly, there are devastating downsides to embracing nuclear reactors that could cause nations to shy away from the energy source for decades at a time. However, the risk/reward scenario seems to be increasingly worthwhile for nations more than willing to put in more than enough safeguards to avert nuclear crises. In any case, I just don’t see Cameco giving back all of the gains posted in the past two years unless there’s an unforeseen incident that sets the field of nuclear power back.
Let’s shift from uranium to gold, an asset that’s been a proven store of wealth for generations. With inflation still running hotter than average and hopes for lower rates in the new year, I’d argue gold has what it takes to make higher highs by the end of the year.
Indeed, Barrick Gold (TSX:ABX) continues to be one of my favourite ways to play the gold markets, with its incredibly well-run operations and its 2.57% dividend yield. Last year, the firm produced more than four million ounces of gold — quite impressive for the juggernaut. Moving ahead, I’d argue Barrick has to be one of the highest-upside ways to play the shiny yellow metal.
Though Barrick and other gold mining stocks will always be a rougher ride than bullion, I think the rewards potential is worth the turbulence you’ll endure. And, of course, there’s that juicy dividend. I like getting paid to wait, as opposed to paying for secure storage of physical bullion. In short, Barrick’s the gold standard when it comes to gold investments.
Nutrien (TSX:NTR) is an agricultural commodity company that’s in a slump right now, down around 34% over the past year. At 11.7 times trailing price-to-earnings (P/E), the stock looks dirt cheap, even as potash prices lose a bit of momentum.
Longer term, the rising global population still calls for higher crop yields. And with such a strong secular tailwind, I think any steep declines in Nutrien are worth buying with both hands. I have no idea when Nutrien will march higher again, but I view shares as oversold and potentially undervalued. The 4.12% dividend yield is a nice bonus for those who just love getting paid to wait.