After years of stagnation and false starts, nuclear energy is back in the spotlight. It's not hard to imagine why. Policymakers and utilities companies want reliable clean power, while data centers need round-the-clock electricity to keep their servers humming for artificial intelligence (AI).
The resurgence in nuclear power has been so momentous lately, it can be hard to decide which nuclear stock looks posed for massive growth. But if I had to choose one today, I'd go with the uranium producer Cameco (CCJ 3.10%). Here's why.
Uranium scarcity in the West is a strong tailwind
Cameco is one of the world's largest uranium producers, which gives it a scarcity value that could grow even richer in the next half decade.
Demand for nuclear fuel is rising as more countries commit to building out their nuclear energy capacity. At the same time, supply has been lagging, at least outside of Russia, as decades of underinvestment in new mines has now left a gap between current production and what will be needed to power the future of nuclear energy.
Image source: Getty Images.
That short supply of uranium has given producers like Cameco enormous pricing power. The company stated in its latest quarterly report, "As the market continues to improve, we expect to continue layering in volumes that capture greater future upside using market-related pricing mechanisms."
Cameco plans to add sales bit by bit, which means it knows demand for uranium is hot and wants to capitalize on a future of rising prices. Indeed, the company did capitalize on rising uranium prices in the third quarter. Although its third-quarter sales were lower, average realized prices were higher, which kept its net loss at a minimum.
NYSE: CCJ
Key Data Points
If demand for uranium continues to outpace supply, Cameco's future deliveries could become even more profitable. Right now, its top assets -- the McArthur River and Cigar Lake mines -- have high-grade ore and low production costs. Higher prices would only make them more lucrative.
A parabolic trajectory isn't guaranteed, of course. But if the future is nuclear, Cameco seems poised to climb.
