Ready to reload your portfolio with something other than another overpriced AI technology stock? If so, you’re not alone. The artificial intelligence opportunity is real, but stepping into its most obvious names here feels… uncomfortable.
Fortunately, there are safer, more affordably priced ways to plug into it. Nuclear power play Cameco (CCJ +1.93%) is one of them.
Image source: Getty Images.
What’s Cameco?
Simply put, Saskatchewan-based Cameco is one of the world’s biggest providers of uranium used to generate nuclear power. It sold 33 million pounds of the stuff last year, preparing it for use after it was retrieved from several mines. The company is also a minority owner of Westinghouse, which builds and services nuclear power plants. Cameco did nearly $3.5 billion worth of business last year, up 11% year over year, turning $590 million of that revenue into net income.
Three reasons to buy Cameco stock
That’s a snapshot of the company’s recent results, anyway. Why should investors be willing to take a shot on its stock here and now?
1. The nuclear power business is poised for prolonged growth
For years, it appeared the nuclear power industry was simply going to fade away, displaced by seemingly safer and more flexible renewable energy options like solar and wind. Those alternatives are still coming into their own. But driven by the artificial intelligence data center industry’s insatiable demand for electricity, the world is falling back in love with nuclear power.
An outlook from the International Atomic Energy Agency puts things in perspective. As of early this year, it expects the planet’s nuclear power capacity to grow by 160% from 2024 levels by 2050, in line with a forecast from the World Nuclear Association.
For further perspective, the World Nuclear Association reports that 75 reactors are currently under construction and another 120 are planned, versus the 440 that are up and running right now.
2. Cameco is the biggest supplier on this side of the planet
Cameco isn’t the biggest name in the business. In some respects, however, it’s the largest accessible source of enriched uranium used by a huge number of nuclear power facilities. The only supplier that’s bigger is Russia’s Rosatom, which has access to a massive source of raw uranium in the nearby country of Kazakhstan. This supply is largely locked up by logistical and geopolitical hurdles, however, leaving Cameco to serve as the chief supplier of enriched uranium in this half of the world.
3. The stock is undervalued
Finally, buy Cameco stock like there’s no tomorrow just because it’s undervalued.
Today’s Change
(1.93%) $2.14
Current Price
$112.77
Key Data Points
Market Cap
$49B
Day’s Range
$108.69 – $113.80
52wk Range
$58.18 – $135.24
Volume
126.5K
Avg Vol
3.3M
Gross Margin
27.44%
Dividend Yield
0.15%
Some investors might disagree with this assessment. Shares of this nuclear name are up nearly 80% over the past 12 months and up almost 300% over the past three years, as investors have gradually realized the immediate and massive power needs of artificial intelligence data centers. The stock’s also suspiciously gone nowhere since early this year.
Just know that analysts aren’t deterred. Most of them rate this ticker a buy (or better) right now, with a consensus price target of $131.78, which is nearly 20% above the stock’s current price.
