As a beginner investor, the laws of trading that tell you to buy low and sell high are pretty simple to understand on paper. However, as many market newcomers quickly find out, it’s not as simple to do. Not only can buying low lead to even lower lows and heftier locked-in capital losses, but buying high with the intent of selling higher can also make one a good profit, perhaps more significant profits than chasing losers that are fundamentally “lost.”
Whether you subscribe to the value-conscious, dip-buying philosophy that entails buying low and selling a bounce, or a more momentum-driven one that entails buying at fresh all-time highs, I think oversimplifications can get beginners into a bit of trouble. At the end of the day, it matters less how much a stock is off from its highs or how much it’s up in the past month, quarter, year, or even the past five years.
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Buying high and selling higher can work, too
Indeed, investors should focus on the future, rather than the past, as the chart could have the potential to be drastically different in as little as a year from now. Either way, I think buying low or high isn’t as important as how much of a discount in the market price of a stock one will get from its true worth, or, at least, the very least, an investor’s estimates for its intrinsic value.
In any case, I think that long-term investment, rather than seeking to trade a stock, is the better way to go for real long-term wealth building. And with that in mind, here’s one name that I view as suitable to buy, even at today’s heights, with the intent of holding for many years, and, eventually, selling at a price that’s hopefully significantly higher.
Cameco stock: It’s scorching hot and is still worth owning, given its powerful fundamentals and tailwinds
Enter shares of Canadian uranium producer Cameco (TSX:CCO), which has been heating up in recent quarters, now up close to 115% in the past year or just shy of 60% year to date. Indeed, the stock’s at fresh highs and while the valuation may seem suspect to some (98 times trailing price-to-earnings (P/E) at the time of writing), I continue to find the name as a worthy addition, given the scarcity premium (there aren’t as many premier uranium miners out there that are the calibre of Cameco, at least in my view), the secular tailwinds (nuclear power demand is surging, thanks in part to the rise of artificial intelligence), its prized mining assets, and, of course, the company’s exceptional operating track record.
Indeed, I’ve pounded the table on the stock when it started off the year in a trough, which was exacerbated by that post-Liberation Day sell-off. Since then, CCO stock has been rocketing higher, and it hasn’t looked back. Though the dirt-cheap buy-the-dip bargain has come and gone, I still think there’s value to be had in buying at close to $120 per share. The company may have experienced some delays that will impact production.
However, I think it’s really nothing that impacts the fundamental story at hand. Prior bets are paying dividends and, over the foreseeable future, I suspect they’ll continue to, especially if the nuclear energy boom fuels even hotter uranium demand. Though the price of admission is getting steeper, so, too, is the opportunity at hand. Perhaps Cameco is a name to buy now and on any future dips with the intent of holding for the next decade or more. It’s in the midst of a powerful secular bull run and one that won’t be so quick to be halted, in my view.
