Editor's note: This article has been corrected. Constellation plans to restart the Three Mile Island Unit 1 reactor, which was retired for economic reasons in 2019.
Shares of Canada-based uranium miner Cameco (CCJ 2.39%) are sizzling. The uranium stock surged 17.5% in September, according to data provided by S&P Global Market Intelligence, and continues to rally. It's up a solid 37% in one month, as of this writing.
The focus is back on the uranium industry, and Cameco just announced plans to expand capacity. That could mean even bigger days ahead for the stock.
Uranium stocks are a bet on nuclear energy
Cameco is one of the world's leading producers of uranium, a key nuclear fuel used to power nuclear power plants. That largely explains why the stock has surged in recent weeks after some interesting developments in the nuclear energy industry.
To name a few, 14 global banks and financial institutions pledged support for nuclear energy at an event in September. That should ideally mean easier funding for the industry, which is crucial for developing capital-intensive nuclear reactors.
In another major development, utility giant Constellation Energy is planning to restart Three Mile Island Unit 1 reactor -- which was retired for economic reasons in 2019 -- after signing a 20-year power purchase contract with tech giant Microsoft in September. Oracle CEO Larry Ellison also announced plans last month to use nuclear power for its artificial intelligence (AI) data centers.
Meanwhile, Russian President Vladimir Putin announced plans to limit exports of commodities like uranium and nickel last month in retaliation for sanctions imposed on it by the U.S. If Russia makes a move, the global uranium supply will take a hit, and the prospect is already sending uranium prices higher. Uranium prices have fallen sharply this year on fears of a demand-supply imbalance, but are hovering at their highest in over a month right now in anticipation of a Russian export ban, according to data from Trading Economics.
All these factors combined sent Cameco stock soaring in recent weeks, but the rally may have just started.
Why you should buy and hold Cameco stock
In an interview with Bloomberg television on Oct. 8, Cameco CEO Tim Gitzel called it the "best fundamentals" he's ever seen for nuclear, and revealed plans to expand capacity on rising demand for nuclear power. This is, perhaps, the biggest confirmation of the uranium industry's turnaround. Cameco is the best uranium stock to play the boom, and you'll want to keep an eye on this stock, especially with its third-quarter numbers slated for a Nov. 7 release.
