Down 28% From Highs: This TSX Stock Screams ‘Buy’ Right Now

This TSX stock may have fallen from highs, but don’t let that fool you. There is so much more to come.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published March 20, 2025 5:00 pm EDT

| More on: CCO

Investing in the stock market can feel like a game of patience. Prices fluctuate, sometimes without clear reason, and even the strongest companies see valuations dip. This often leaves investors questioning whether a TSX stock’s decline is a sign of trouble or a golden opportunity. One TSX stock that has recently caught the attention of investors is Cameco (TSX: CCO). It has fallen about 28% from its 52-week high, raising the question of whether now is the time to buy.

Nuclear power station cooling tower — Source: Getty Images

Cameco stock

Cameco, headquartered in Saskatoon, Saskatchewan, is one of the world’s largest uranium producers. It plays a key role in the nuclear energy industry, supplying uranium fuel to nuclear power plants worldwide. With operations spanning mining, refining and fuel manufacturing, it is a dominant force in the sector, benefiting from the growing demand for clean energy solutions. Nuclear power remains one of the most reliable low-emission energy sources, and as more countries commit to reducing carbon emissions, demand for uranium is expected to rise.

As of writing, Cameco’s stock closed at $63, significantly down from its 52-week high of $88.18. This sharp decline has caught the attention of investors looking for value plays in a volatile market. To determine if this is a buying opportunity, it’s essential to assess Cameco’s financial health and understand the broader trends affecting the uranium industry.

The numbers

In its latest earnings report for the fourth quarter of 2024, Cameco posted net earnings of $135 million and adjusted net earnings of $157 million. For the full year, net earnings stood at $172 million, with adjusted net earnings reaching $292 million. These numbers indicate a strong financial performance, supported by higher sales volumes and improved realized prices. Security of supply concerns have boosted Cameco’s importance as a stable uranium provider, particularly as geopolitical tensions have disrupted supply chains.

Despite these solid earnings, Cameco’s stock has taken a hit. A key factor behind the decline is the recent drop in uranium prices. Over the past year, uranium prices have decreased by about 31%, hovering around $65 per pound. Lower uranium prices directly impact Cameco’s revenue, which in turn affects investor sentiment. When uranium prices fall, investors often expect weaker profitability, leading to a sell-off.

Is value there?

Another factor influencing the stock’s performance is its valuation. Cameco’s price-to-earnings (P/E) ratio currently stands at 158 at writing, significantly higher than many of its industry peers. A high P/E ratio suggests that the stock is priced at a premium, which can deter value-focused investors.

However, when looking at the company’s free cash flow, the valuation appears more reasonable. Cameco generated $905 million in cash from operations in 2024, and its full-year adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) surged by 73% to over $1.5 billion compared to $884 million in 2023. This demonstrates that despite the high earnings multiple, the company remains financially strong.

Future outlook

One of the most significant developments for Cameco in 2024 was its investment in Westinghouse Electric Company. The TSX stock finalized the acquisition of a 49% stake in Westinghouse in the fourth quarter. Westinghouse reported a net loss of $218 million for the year, primarily due to purchase accounting adjustments. However, it contributed $483 million in adjusted EBITDA. While this acquisition resulted in some short-term financial pressure, it is expected to be a long-term growth driver.

Looking ahead, Cameco’s management remains optimistic about the company’s prospects. The nuclear energy industry is experiencing renewed interest as governments seek clean and reliable energy sources. Many countries are extending the lifespans of existing nuclear reactors and investing in new nuclear infrastructure. This shift could lead to stronger demand for uranium, benefiting Cameco as one of the world’s top suppliers.

Bottom line

Investing in a TSX stock like Cameco requires a long-term perspective. The nuclear energy sector is evolving, and Cameco is playing a central role in its development. While the TSX stock has declined significantly from its highs, its strong earnings, cash flow, and strategic acquisitions suggest it has the potential to recover. As always, investors should conduct thorough research and assess their risk tolerance before making any decisions.