When investors think of top growth stocks, whether they be North American or global players, tech companies and those outfits focused on artificial intelligence, blockchain technology, and other disruptive hotbeds of innovation are the first companies that are often looked at.
However, in my view, there are other (and perhaps better) growth stocks worth considering in much more stable sectors. Leading uranium producer Cameco (TSX: CCO) has actually produced some of the most impressive medium-term growth for investors of any Canadian stock in the market.
With a return of more than 650% over the past five years for investors in the often-overlooked uranium player, this isn’t a stock to be trifled with in my view. Here’s why I think Cameco remains a strong buy in this current environment.
Source: Getty Images
Nuclear energy could be the future
While many investors during the Biden administration took a much closer look at various renewable energy companies (namely, solar, wind and geothermal players), nuclear energy is one sector I think has remained relatively overlooked. For one, government funding for this space has been more muted, and there simply hasn’t been the headline news flow that other renewable sectors have gotten.
That said, Cameco’s recent strategic investment in Westinghouse Electric has bolstered its strategic positioning in the nuclear energy sector, while also providing a nice boost for investors. The company announced it expects to see an increase of around $170 million from its initial investment in the company.
This partnership is expected to result in two nuclear reactors at the Dukovany power plant in Czechia, an expansion I think should contribute significantly to Cameco’s existing revenue growth trajectory, which should average around low-double-digits for the next decade or so.
Strong fundamentals
Finally, I think Cameco’s underlying fundamentals are much better than they’ve been in some time. In this environment, I think investors need to pay attention to what the numbers say more than they have in a long time.
In the case of Cameco, the good news is that the company’s performance has been robust in recent quarters. Cameco has been able to maintain a strong balance sheet due to earnings per share, which have continued to grow in meaningful fashion, and strong industry tailwinds and market fundamentals.
I don’t see any reason why the overall backdrop should and will change. So, Cameco looks like a solid buying opportunity here, at least to me.
