Shares of Cameco Corp. (NYSE:CCJ) started January with a 27% gain over roughly two weeks or so. Then the stock lost most of that in just a couple of days, leaving the world's largest publicly traded pure-play uranium miner up around 5%. And then the stock rocketed through the end of the month to end January with a price advance of a little more than 22%. Not a good month if you like to sleep well at night.
The early strength at Cameco was the tail end of a rally that started after Donald Trump was elected president. The mid-January swoon, meanwhile, was likely the result of investors taking a second look at Cameco after a 50% boost since Election Day and either booking some profits or at the very least questioning the sustainability of the advance. After all, very little has actually changed in the moribund uranium market since Trump was elected.
Then, on Jan. 17, Cameco pre-announced earnings. At first blush, the news was bad, since the company was warning that it would materially miss analysts' expectations because of asset impairment charges. However, the company also reported that its underlying business remained solid, with CEO Tim Gitzel explaining, "Our current earnings expectations are not reflective of the strength of our core uranium business, which saw us achieve our outlook for delivery volumes at a realized price 83% higher than the current spot price."
In other words, the uranium industry is tough today, but Cameco is continuing to hold its own.
That's great, but don't expect the roller-coaster ride to end just yet. For example, in early February, Cameco got news that a major Japanese customer was canceling its contract, citing a force majeure event since it hasn't been able to operate its nuclear plants since the Fukushima disaster. Although Cameco plans to fight the contract termination, the stock has fallen more than 15% since that news hit the market. At the end of the day, Cameco remains a great way to invest in the uranium market, but the latter remains troubled.