Cameco (TSX:CCO) stock has been on a tear this year, with shares already up 81% in the last year alone. Now earnings are around the corner, and investors may be wondering if this is all Cameco stock has to offer. Or, whether now is the time to get in before earnings surge higher.
So, let’s take a look at what short- and long-term investors could expect.
Cameco stock achieved all-time highs last month on January 15, with shares only slipping back slightly in that time. Even during that time, the company continues to beat the market. And honestly, for good reason.
The company recently held an investor day, where Cameco management stated they remain in a “very advantageous position” when it comes to nuclear power utility customers. Cameco continues to see uranium as the main replacer of oil and gas companies. And with more electricity needs than ever, uranium will be needed to power that future.
What’s more, even with more uranium needed than ever before, Cameco doesn’t need more mines. In fact, its existing mines will provide all the access they need. Yet, there was one issue that even Cameco stock couldn’t work around.
Yes, uranium prices reached as high as US$87 per pound recently, and remaining quite high. However, it could be that these spot prices could come down. And when they do, it’s likely Cameco stock will react as well.
Therefore, while there may be continued strength for Cameco stock in the near future, the distant doesn’t seem so clear. While Cameco is certainly perhaps the uranium producer of choice right now, and will continue to be, it may not be as strong as we think long term.
Overall, Cameco stock looks as though it will merely fall in line with expectations when earnings come out. There really isn’t anything that management stated during the investor day that would have shareholders and analysts holding their breath.
So what are investors to do?
Analysts weigh in
Right now, Cameco stock is expensive. There’s no getting around it. Though this might continue as spot prices remain high, it could also turn tail and run as well. And investors believe that could happen sooner as opposed to later could. We could see Cameco stock fall after earnings. Even if those earnings fall in line with estimates.
That being said, not every analyst believes the stock is a hold. Some even increased their target price after the investor day, citing long-term contracts that make the stock solid. This would provide downside protection in case spot prices drop.
All in all, the world needs decarbonized solutions, and Cameco stock provides them. It continues to have enough mines on hand to meet demand, and therefore can continue to collect cash should it need to expand. Yet for now, it remains a top choice with the spot price remaining so high. And that’s likely to continue, at least for now.
Shares of Cameco stock currently trade at 109.4 times earnings as of writing. Earnings are due out on February 8 this week.