It didn’t take all too long for shares of Canadian uranium producer Cameco (TSX: CCO) to make up for lost time by melting back up to (and above) all-time highs. Indeed, the nuclear energy renaissance still seems to be in its early innings. And while investing in the top uranium producers could be met with choppier waters (Cameco stock has a beta of 1.2, making it a slightly more volatile ride than the market), those who stay the course and take advantage of the odd pullback, I think, could be met with a greater shot at outsized results.
In the past two years, Cameco stock has had more than a handful of corrections. But over the timespan, shares found a way to soar just over 146%. These are some seriously impressive gains that brave investors have been rewarded with. And while it’s tempting to trade the name, I do think that most investors would be best to fasten their seatbelts for the next four to six years, while adding to a position on those steep pullbacks.
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Cameco stock is blistering hot. It’s still worth owning.
Although Cameco stock appears pricier today than it did a year ago, the nuclear energy boom may not be fully reflected in the current valuation. As you’re probably aware by now, there’s an artificial intelligence (AI) boom going on that’s paving the way for fancy, new power-hungry AI data centres (not only in the U.S. but internationally), and someone is going to need to provide a heck of a lot more power. Nuclear energy seems to be the best way to supply more energy to meet the growing demands of these AI powerhouses.
Many global superpowers are also taking the rise of AI seriously. And many firms are likely to follow the U.S. lead as nuclear power becomes viewed as less intimidating and more manageable, economical, and clean by various global superpowers.
Indeed, there may be no slowing the resurgence of nuclear power, even if the AI trade were to slow down at some point down the road. And with that, uranium prices could be in for higher highs from current levels. In any case, Cameco is a very well-run producer that’s well-equipped to thrive in the coming decade.
Tariffs may be a near-term volatility driver, but think longer term!
Recently, the company’s CEO urged shareholders to think less about the tariff chatter and focus more on growing demand for uranium over the long term. He’s absolutely right. Tariffs are scary — no doubt about that. But the bigger story, especially over the next five years, will lie in growing demand for nuclear reactors.
Add potential Russian sanctions into the equation, and Cameco stands out as a force in the global uranium production market. Indeed, the secular tailwinds, I think, seem way too powerful to consider throwing in the towel on shares of CCO right here, even after its excellent past year of market-crushing gains.
At just over 68 times forward price-to-earnings (P/E), Cameco shares don’t come cheap. But given the magnitude of tailwinds at the firm’s back, perhaps it’s a wise idea to buy a small position here with the intention of buying more into the next pullback.
