Why Cameco Stock Has Jumped More Than 10% in 2 Days
Cameco (NYSE: CCJ) stock's rally from last Friday extended into trading this morning, with shares of the uranium miner rallying 5.5% at its highest point during the day through noon Monday. The uranium stock was up almost 12% over two days as of this writing.
Latest developments have fueled hopes of a resurgence in the nuclear energy industry, and investors believe Cameco -- a significant producer of the nuclear fuel uranium -- could be the best stock to play a potential recovery in the uranium markets. They could be right.
The focus is back on nuclear energy
This morning, 14 of the world's banks and financial institutions pledged support for nuclear energy at an event in New York City. Specifically, the banks are backing the Declaration to Triple Nuclear Energy endorsed by more than 20 countries, including the U.S., at the COP28 summit last year to more than triple global nuclear energy capacity by 2050.
While it's not clear yet how banks will contribute, they could extend more funding to support the global nuclear energy industry. Nuclear reactors, used at nuclear power plants to generate energy, are expensive to build, and lenders often shy away from financing them given the complexities in the construction and operation of nuclear power reactors and plants.
Support from banks comes at a crucial time as nations across the globe are reconsidering nuclear energy's potential to help them address the climate change crisis. Just last week, utility giant Constellation Energy signed a 20-year power purchase contract with tech giant Microsoft. It later announced plans to restart a nuclear power plant shuttered since 1979 in Pennsylvania.
Cameco stock is a solid bet on nuclear and uranium
Since nuclear reactors run on uranium fuel, Constellation Energy's announcement sent uranium stocks flying last Friday. Today's fresh development drove shares of Cameco even higher, as Cameco (alongside Kazakhstan's Kazatomprom) is one of the world's largest uranium producers and has significant clout in the industry.
Although the uranium industry won't turn around overnight, demand for uranium should eventually rise as more nuclear reactors come online. Nearly 60 nuclear reactors are currently under construction and another 90 or so are planned globally, according to the World Nuclear Association's latest report. Any rise in the demand for and price of uranium should benefit Cameco, given its foothold in the industry and its financial flexibility.
Should you invest $1,000 in Cameco right now?
Before you buy stock in Cameco, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cameco wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $710,860!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 23, 2024
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy and Microsoft. The Motley Fool recommends Cameco 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.
Why Cameco Stock Has Jumped More Than 10% in 2 Days was originally published by The Motley Fool