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Will Cameco Light Up the Second Half?

With more than half of 2012 in the record books, it's important to take a look at whether or not the stocks that interest you can live up to their full potential. By making sure you know about a company's future plans and possible challenges, you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Cameco (NYSE: CCJ  ) . As we saw in our look at Cameco last month, the Japanese nuclear disaster in early 2011 took the wind out of the sails of the nuclear industry and threatened uranium demand as Germany and other countries considered radical cutbacks to their nuclear energy programs. Let's take a quick look at Cameco's prospects for the rest of the year and beyond.

Stats on Cameco

Average Stock Price Target $28.83
2012 EPS Estimate $1.19
2013 EPS Estimate $1.61
2012 Sales Growth Estimate (2.9%)
2013 Sales Growth Estimate 14.6%
CAPS Rating (out of 5) *****

Source: Yahoo! Finance.

What will the rest of 2012 bring for Cameco?
The big question facing Cameco is whether nuclear energy comes back into vogue once memories of the disaster in Japan start to fade. To a large extent, the big drop in prices of both natural gas and coal have taken the focus off nuclear energy, and that's a big part of why peers Uranerz Energy (NYSE: URX  ) and Uranium Energy (NYSE: UEC  ) have suffered such big drops in the past year.

But with United States Natural Gas ETF (NYSE: UNG  ) having risen 50% off its lows in April, it's increasingly clear that natural gas won't stay cheap forever. As gas prices rise, coal should follow, and that will make nuclear energy again look like a more attractive option. With Southern Company (NYSE: SO  ) having gotten permission to build two new nuclear reactors, the stage is set for another step up for uranium demand. Combined with China's rising uranium demand, Cameco could get a lot more of its losses back, rewarding value-hunting investors who buy shares at cheap prices now.

So far, uranium prices haven't really gone anywhere in the past year, and as long as prices stay relatively stable, Cameco's gains will remain capped. But in the long run, Cameco has a lot of potential as a leading player in the uranium industry, and getting into the stock at near 2005 price levels seems like a good play going forward.

Cameco is definitely worth a closer look, but it's not the only promising mining play out there. Read The Motley Fool's latest special report on gold to discover the tiny gold stock digging up massive profits. It's free but only available for a limited time.

Click here to add Cameco to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Southern. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

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Related Tickers

10/28/2016 4:02 PM
CCJ $7.93 Down +0.00 +0.00%
Cameco CAPS Rating: ****
SO $50.70 Down -0.06 -0.12%
Southern Company CAPS Rating: ****