If You Invested $10,000 in CCO Stock in 2023, This is How Much You Would Have Today

Cameco stock (TSX:CCO) doubled in share price in the last year before falling back slightly, but could it do it again?

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There are few companies that have done quite as well as Cameco (TSX:CCO) in the last year. And even fewer who have seen such sustained growth. And yet here we are, with Cameco stock seeing incredible gains of 63% in the last year alone.

That would mean if you had purchased $10,000 in Cameco stock one year ago, your shares would be worth $16,470 as of writing! Yet shares have come down slightly from 52-week highs. At those levels, you could have cashed out at $20,347.

The big question is whether this can continue to go on? Will Cameco stock continue at this clip, or are investors going to become impatient and take out returns? Today, let’s look at the strengths and potential pitfalls investors in Cameco stock may expect.

Rising uranium

When it comes to Cameco stock, the biggest advantage it has is the uranium market. Spot uranium prices continue to be on the rise, currently at around US$90 per pound. That’s welcome news for Cameco stock, which continues to be the leading supplier of uranium, as higher prices mean high revenue.

And that’s exactly what we’ve seen. Cameco stock’s recent results have been quite positive, with the fourth quarter showing a significant increase in revenue, gross profit, and adjusted earnings per share, as well as operating cash flow.

But if you’re worried about this slowing down, that’s not likely to happen any time soon. There continues to be growing recognition that nuclear power will play a large role in the clean energy transition. The International Atomic Energy Agency calculated there are currently 438 reactors operating globally, but 58 more under construction. Even more will likely continue to be built, leading to further opportunities for Cameco stock.

The downside

Of course the problem here might be obvious, and that’s the reliance on uranium prices. We’ve seen this in other areas as well. The price of one product might soar at first, and then fluctuate over time, leading to lower revenue for the company.

This could certainly happen with Cameco stock, as uranium prices might rise now, but are historically volatile. The price can depend on geopolitical events, new mine discoveries, and even weather. This could lead to a sudden price drop in the past. Historically, this has occurred from reactor meltdowns.

Furthermore, Cameco stock isn’t without competition, especially as there continues to be more mines found in Russia and Kazakhstan. While there are Russian sanctions now, that may not be the case forever, leading to lower uranium prices.

Finally, the long-term outlook for nuclear power is uncertain. Despite is resurgence, public perception, safety concerns and competition from other renewables are still on the table. So the growth in nuclear power and uranium may not be a long-term option.

Bottom line

If you’re interested in Cameco stock, it’s certainly a safe bet I’d say for the next year, barring major events. In that time, you could certainly continue to see its share price rise even further. But as for a long-term hold, that will be something you’ll need to check in on regularly with this 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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Cameco. The Motley Fool has a disclosure policy.

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