With Cameco (NYSE: CCJ) trading at roughly 26 times its estimated 2025 earnings, no investor is buying stock in this uranium, nuclear fuel services, and nuclear plant services company for what it is now. It's far more likely they are buying for what it could become in the future.
As such, the case for the stock doesn't just rest on a "connect the dots" approach to its metrics and the possibility of an expanded role for nuclear energy. There is something more going on here. Let's explore.
The case for Cameco
There's an evolution underway in the energy sector. It was supposed to be a revolution, but even the most adherent enthusiasts for a clean energy transition must concede that it's taking far longer than expected. This new reality is behind the expanding appreciation for stocks connected to natural gas and liquid natural gas (LNG) and a resurgence of interest in nuclear energy.
Simply put, reliable and relatively cheap sources of energy like gas and nuclear power are likely to act, at the very least, as transition fuels to support the shift to clean energy. Their reliability supplants the intermittency of renewable power.
This evolution is a big reason why investors in Cameco, a company that supplies uranium and fuel services to 37 nuclear utilities worldwide, believe nuclear power has a bright future.
Nuclear power finds some influential supporters
That future is supported by investment from some very significant players. All three of the leading cloud service companies have signed deals to purchase nuclear-generated electricity (cloud computing and artificial intelligence-related computing require lots of energy). Microsoft signed a deal with Constellation Energy, and Alphabet's Google is investing in small modular reactors developed by Kairos Power. Amazon is also investing in small modular reactors and continues trying to convince regulators to let it buy energy from nuclear reactors.
These leading tech companies see nuclear power as aiding their net-zero clean-energy objectives. They have an influential reach, and their support could accelerate the trend toward nuclear energy. That would be great news for Cameco, the leading pure-play nuclear company on the market.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $378,269!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,369!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $476,653!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of November 18, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends Cameco and Constellation Energy and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
