Is Cameco Stock Still a Buy?

Cameco stock recently reported earnings that showed the Westinghouse investment is creating some major costs. But that could change.

| More on:
nuclear power plant

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Cameco (TSX:CCO), a global leader in uranium production, has recently caught the attention of investors following its third-quarter (Q3) 2024 earnings report. In light of its performance, as well as key events such as the Westinghouse Electric acquisition and Donald Trump’s recent U.S. presidential re-election, there’s a renewed focus on whether Cameco stock remains a strong buy. These factors are shaping Cameco’s potential as a top choice in the nuclear energy market, where both demand and complexity are on the rise.

Created with Highcharts 11.4.3Cameco PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Into earnings

Cameco stock’s Q3 2024 earnings report was a mix of highs and lows. Revenue surged by 25% year over year to reach $721 million, thus signalling growing demand and successful scaling efforts. However, net income plunged 95% to $7.43 million, a dramatic decline attributed largely to heightened expenses.

The revenue growth clearly shows that Cameco is tapping into a strong market for uranium, yet the lower profit margin reminds investors of the increased operational costs the company faces as it expands its role in nuclear energy. Analysts have pointed out that the decline in profit margin from 26% in Q3 2023 to just 1% this quarter raises some caution about Cameco stock’s cost management.

Cameco stock’s strategic partnership to acquire Westinghouse Electric Company in November 2023 marked a transformative moment for the company. By gaining exposure to Westinghouse’s expertise in nuclear technology and fuel services, Cameco stock has extended its reach beyond uranium mining into more of the nuclear fuel cycle. This acquisition not only diversifies Cameco’s revenue streams but also aligns it with the ongoing global shift toward clean energy. Yet, it does come with a cost, as seen in earnings.

More to come?

Currently trading at around $73.38, Cameco stock has been somewhat volatile, reflecting its mixed earnings and broader market uncertainties. Yet the market capitalization of over $32 billion indicates strong investor interest and confidence. Cameco stock’s forward price-to-earnings (P/E) ratio sits at 48.54. This reflects the high expectations for future growth and the long-term value potential seen by many investors. With a price-to-book (P/B) ratio of 5.2, Cameco may appear overvalued compared to other stocks in the energy sector. Yet its unique position in uranium and the nuclear value chain justifies a premium for many investors.

The re-election of Donald Trump as U.S. president could have positive implications for Cameco stock and the nuclear industry as a whole. During his previous term, Trump was generally favourable towards nuclear energy, supporting policies that aligned with U.S. energy independence and job creation in the sector. Given that Trump’s administration might once again advocate for domestic energy production and secure nuclear fuel supply chains, Cameco stock could benefit from any push to bolster North America’s energy security.

Looking ahead, Cameco stock’s unique positioning in the nuclear energy market is aligned with growing global interest in cleaner energy solutions. Analysts forecast revenue growth of approximately 5.3% annually over the next three years. This is considerably higher than the expected growth rate for the broader oil and gas industry in Canada. With the Westinghouse deal providing greater exposure to the fuel cycle and ongoing supportive political conditions, Cameco is well-positioned to capitalize on these trends. The company’s consistent focus on long-term contracts and stable revenue from strategic partnerships make it a compelling investment in the nuclear sector.

Bottom line

Cameco stock presents a mixed but promising picture for investors. The combination of a strong Q3 revenue increase, the strategic acquisition of Westinghouse, and a favourable political environment offers considerable upside potential. However, investors should be mindful of the challenges, such as rising operational costs and supply chain uncertainties, that could impact short-term profitability. For those with a long-term horizon and interest in the nuclear energy sector, Cameco stock remains a compelling buy, especially given its strategic moves and role in addressing the global demand for clean energy.

Should you invest $1,000 in BCE right now?

Before you buy stock in BCE, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and BCE wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Energy Stocks

golden sunset in crude oil refinery with pipeline system
Energy Stocks

Is Enbridge Stock (TSX:ENB) a Buy for its 5.9% Dividend Yield?

This solid dividend payer has the potential to help investors generate reliable passive income for decades.

Read more »

nugget gold
Dividend Stocks

Recession Stocks Are Back: Consider Buying the Dip This April

Recession stocks are back, and this one could be a solid winner.

Read more »

Person holds banknotes of Canadian dollars
Energy Stocks

Best Stock to Buy Right Now: Suncor vs Cenovus?

Suncor stock's 4.2% dividend yield vs Cenovus Energy's growth potential: Tariff-proof safety or growth gamble?

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Earn $500/Month in Tax-Free Income With Your TFSA

Canadians can earn $500 or a desired tax-free income every month by saving and investing through the TFSA.

Read more »

how to save money
Energy Stocks

1 Canadian Stock Ready to Surge in 2025 and Beyond

This Canadian stock has seen significant growth, but more could come for 2025 and beyond.

Read more »

oil and natural gas
Energy Stocks

Here’s How Many Shares of Enbridge You Should Own to Get $2,000 in Yearly Dividends

Solid dividend stocks like Enbridge could help you generate reliable passive income for decades.

Read more »

Pumpjack in Alberta Canada
Energy Stocks

3 Canadian Oil and Gas Stocks to Watch for in 2025

Oil companies like Suncor Energy (TSX:SU) are doing well this year.

Read more »

Aerial view of a wind farm
Energy Stocks

The Best Renewable Energy Stocks to Buy Before They Take Off

Here are two of the best Canadian renewable energy stocks you can buy today and hold for the long term…

Read more »