Watching the prices of growth stocks can be a fantastic way to spot companies that are on the path to recovery. When a stock starts gaining traction, it often means that investors are seeing renewed potential in the company. Maybe the company has revamped its strategy, improved its financial health, or is riding a big-picture trend.
These stocks may still be trading below their peak prices, offering room for growth as they continue to rebound. Plus, catching a stock on its way up can mean you’re getting in before the broader market recognizes its full potential. I think this stock is a prime example today.
Cameco stock
Cameco (TSX:CCO) has been on quite a ride over the past few years, mostly because of global shifts in energy demand and the growing focus on clean energy sources like nuclear power. After years of being relatively underappreciated, the stock started gaining momentum around 2021, which coincided with the increasing attention being paid to nuclear energy as an alternative to fossil fuels. As governments and businesses pivoted toward clean energy, Cameco, one of the world’s largest uranium producers, found itself well-positioned to benefit. This upward trend continued through 2023 and into 2024 as uranium prices climbed as demand for nuclear energy surged in the face of energy security concerns.
The broader energy transition isn’t the only factor that’s affected Cameco stock’s price. As global instability, particularly in Europe, pushed countries to look for stable and low-carbon energy sources, Cameco’s stock saw more interest. Investors also bet on uranium’s potential for future growth as countries invest in nuclear infrastructure to meet emissions targets. This mix of rising uranium prices and increased market sentiment has helped boost Cameco stock, making it one of the buzziest companies in the TSX. The stock hit its all-time high in June 2024.
Recent surge
However, shares fell sharply at the end of July. They’ve been on a tear since then — up about 40% in the past month, driven primarily by the rising global demand for nuclear energy and a series of strategic moves by the company. Notably, the company signed new long-term supply agreements with utilities around the world, which investors see as a vote of confidence in the company’s stability and growth potential. Cameco’s financial performance has also been solid, and its ability to meet growing demand has boosted investor sentiment. These factors created perfect conditions for the stock price to zoom. Even with the recent gains, the stock is currently trading about 8% below its all-time high price.
Looking ahead
Cameco is a strong long-term investment thanks to its impressive financials and the growing demand for nuclear energy. In its most recent earnings report (Q2 2024), Cameco reported a 163% year-over-year increase in quarterly earnings, mainly driven by robust demand for uranium as global markets prioritize energy security and the transition to low-carbon sources. Revenue grew 24% year over year, highlighting the company’s strong position in the uranium market, and funds from operations (FFO) was a solid $709.3 million over the last 12 months. The company has also maintained a stable balance sheet, with manageable debt levels (debt-to-equity ratio of 25%) and cash reserves of $362 million.
In sum, Cameco’s strategic supply agreements and the increasing price of uranium continue to boost its prospects. As nuclear power plays an increasingly vital role in the global energy mix, Cameco stock stands out as a key investment positioned to benefit from both from short-term demand spikes and long-term trend toward clean energy.
