The uranium stock appears to have more upside from here than downside, so pay attention.
Shares of Canada-based uranium miner Cameco (CCJ 5.20%) generated rock-solid total returns (including dividends) of 186% on the Toronto Stock Exchange (TSX) in the three years through June 30. Thanks to its strong performance, Cameco stock made it to the TSX30 2024 list, released yesterday. TSX30 is an annual list of the top 30-performing stocks on the stock exchange over a three-year period based on their dividend-adjusted prices.
Cameco stock rode the wave of surging uranium prices during the period. With prices cooling off this year, the stock has also plunged double digits in 2024. Cameco stock, however, clocked meaningful gains today, surging 6.8% at its highest point in trading through 1:50 p.m. ET Wednesday in anticipation of a potential move from Russia that could help uranium prices rebound.
Uranium prices could recover if this happens
In a meeting today, Russian president Vladimir Putin asked the government to consider limiting the export of key commodities like uranium, nickel, and titanium in retaliation for sanctions imposed on it by the U.S.
Russia is the sixth-largest uranium producer in the world, and the U.S. and China are the top importers of uranium from Russia. Any restriction on exports from Russia, therefore, could hit global uranium supply and help prices recover.
Uranium spot prices are currently hovering around their lowest since November 2023 on fears of a demand-supply imbalance. Higher uranium prices will mean bigger revenue and profits for miners like Cameco, which explains why the stock jumped today.
Should you buy Cameco stock now?
Investors in uranium are already anticipating a recovery in uranium prices after Kazakhstan’s state-owned uranium miner, Kazatomprom, cut its uranium production target for 2025 in August. Kazatomprom is also the world’s largest uranium producer, so any move by the company has a big impact on the uranium markets.
Today’s development gave investors in uranium, primarily used for nuclear power, yet another flicker of hope. If prices recover, Cameco stock could be one of the biggest beneficiaries, given the company’s strong foothold in the industry and a strong balance sheet. In fact, Cameco has already witnessed an uptick in long-term contracts from uranium fuel buyers for some months now, and any rebound in uranium prices should act as the biggest for the stock.
