Reuben Gregg Brewer, The Motley Fool
5 min read
In This Article:
-
Cameco stock is trading near its highest levels in 25 years.
-
The last time its stock was this high was in 2024.
-
A rebounding uranium price and solid first-quarter earnings helped get investors in a positive mood.
After the Fukushima nuclear meltdown in Japan in 2011, shares of uranium miner Cameco (NYSE: CCJ) fell into a deep rut. It took a decade for it to climb out of the hole, and in 2024, the stock rose toward a high of a little over $60 a share on rising uranium prices.
When uranium prices began falling in February 2024, the stock fell along with it, going as low as the mid-$30s. The stock price eventually recovered and it now trades around $58 a share.
Should investors buy Cameco as it makes a run toward the 25-year-high price of a touch over $60 again?
Cameco is a large Canadian miner that produces and processes uranium into fuel for nuclear power plants. It also owns a 49% stake in Westinghouse, which provides services -- from plant construction to plant maintenance -- to nuclear power companies. It is one of the largest publicly traded producers of uranium on the planet.
A key selling point for Cameco's uranium is where it operates. The vast majority of its owned mines are in North America, a region considered economically and politically stable. And while it does source uranium from less-stable regions, potential customers generally appreciate working with companies from stable regions.
Cameco's long history in the industry is another positive, since it proves the company can survive the swings that commodities often experience.
Such swings are particularly notable for uranium because external factors can have such a large effect on the nuclear power industry. The Fukushima meltdown was the most recent example, with other notable events including Three Mile Island and Chernobyl. After such high-profile disasters, nuclear power usually goes through a period in which it is shunned and uranium prices fall.
When nuclear power is out of favor and uranium demand is thus relatively weak, Cameco's stock price suffers. But nuclear power is increasingly being seen as a clean source of baseload power (the minimum required to meet the demands of a power grid) to support intermittent clean energy sources like solar and wind. With Fukushima more than a decade in the past, the negative overhang is long over.
Despite a year-over-year drop in uranium prices, Cameco managed to put up solid first-quarter 2025 earnings results. That's in large part because it doesn't sell uranium at the spot price, it signs long-term contracts.
