The recent spike in stock market volatility presents compelling buying opportunities for investors with a long-term investment strategy. Celestica (TSX: CLS) could be an undervalued artificial intelligence (AI) stock after experiencing a 33% drawdown during the past three months, and uranium mining giant Cameco (TSX: CCO) stock looks appealing following a 31% decline despite a bullish uranium outlook for 2025. Let’s see why the beaten-down growth stocks could be great buys in September.
Cameco stock: A winner as uranium supplies fall in 2025
Canadian uranium production giant Cameco is primed to report one of its best set of annual results in a decade this year, thanks mostly to a recovery in uranium prices over the past 18 months. However, Cameco stock has suffered a 31% decline during the past three months as spot uranium prices took a breather.
Cameco stock’s recent fall is associated with a sustained drop in global uranium spot prices this year. Uranium peaked above US$100 a pound in January, but spot prices averaged US$78.50 in August, killing investor enthusiasm for nuclear stocks. However, Cameco’s fall could be a buying opportunity for investors who missed the 335% five-year rally on CCO stock.
The company may see minimal impact from the recent decline in spot prices in the near term as it delivers its production exclusively into the long-term contract market. Contract prices have continued to rise this year from US$72 in January to average US$81 in August, giving the company room to clinch new business at better prices.
Uranium prices may still rebound in 2025 after KazAtomProm, the leading global uranium miner, announced a 17% planned production cut for the next year, citing project delays and sulphuric acid shortages in August. Exacerbated by a disruptive Russia/Ukraine conflict, global uranium mine production may shrink in 2025 to push spot prices up again.
Cameco is the best-placed North American uranium stock to buy and play the nuclear fuel upside. It’s a low-cost producer that’s sustainably making profits and producing positive free cash flows from the nuclear fuel and services business, and it’s ramping up production from previously mothballed assets so it can earn more profits during the current uranium super-cycle.
Cameco stock looks undervalued
Most noteworthy, Cameco stock looks undervalued with a forward price-to-earnings (P/E) ratio of 32.6 and analyst long-term earnings growth estimates ranging from 65% to 83% annually, which place its forward price-earnings-to-growth (PEG) ratio close to 0.5. Generally, PEG ratios below one imply investors are underpricing a stock’s future earnings, and Cameco stock is deeply undervalued, by this measure.
Bay Street analysts’ average price target of $79.44 implies a 55.5% potential upside on Cameco stock over the next 12 months.
Celestica stock: An undervalued AI stock with strong upside
Global artificial intelligence stocks have undergone some correction, and Investors looking for a profitable growth stock that’s undergoing a temporary weakness may check out Celestica stock right now. Shares have experienced a 33% drawdown during the past three months, and CLS stock looks grossly undervalued, given its near-term revenue and earnings growth potential.
The contract manufacturer to the technology industry is in a hyper-growth mode in 2024. Its connectivity and cloud solutions (CCS) segment revenue rose more than 50% year over year to constitute 68% of revenue and contributed 77% of total income during the past quarter.
Given that we are seemingly in the early innings of a multi-year AI market growth cycle with industries upgrading their computing and networking hardware to make it AI-compliant, Celestica’s hyperscaler and switchgear markets could sustain a multi-period growth spree that sustains strong revenue and earnings growth over the next two to three years.
Meanwhile, Celestica stock trades at a forward P/E of 11.7 and a forward PEG ratio of 0.5, implying the tech stock could be grossly undervalued relative to its long-term earnings growth potential. An average analyst price target of $82.74 at writing implied a 43.2% potential upside on Celestica stock over the next 12 months.
