Cameco (CCJ +1.67%), the world's second-largest uranium miner, was a dismal investment for more than a decade. From 2011 to 2021, its revenue plunged from $2.4 billion to $1.2 billion without a single year of growth. That decline was caused by the Fukushima disaster in 2011, which drove many countries to rein in their nuclear expansion projects; the COVID-19 pandemic, which forced many miners to suspend their operations; and a weak Canadian dollar.
But by 2024, Cameco's revenue had nearly doubled to $2.3 billion. The year-end spot price for uranium, which dropped from $62.25 in 2011 to $35.00 in 2020, jumped to $72.63 in 2024. That recovery was fueled by new low-carbon initiatives, the rapid growth of the power-hungry cloud and AI markets, and geopolitical conflicts in uranium-rich regions. The previous suspension of many uranium mines and mills exacerbated that shortage and further drove up those prices.
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Cameco's stock closed at a record high of $106.91 on Oct. 28, marking a 320% gain from its previous four years. It's pulled back to $79 as of this writing, but it's still up 55% for the year. Let's see if it can rally even higher over the next few years.
Cameco's business model is evolving
Cameco, which is based in Canada, operates its uranium mines across Canada, the U.S., and Kazakhstan. It mined approximately 17% of the world's uranium in 2024, putting it firmly in second place after Kazatomprom, Kazakhstan's national atomic company.
In 2021, Cameco increased its stake in Global Laser Enrichment (GLE) -- its uranium enrichment joint venture with Silex (SILXY +0.50%) -- from 24% to 49%. It's integrating GLE's laser-based uranium enrichment capabilities into its core mining and conversion businesses, which marks a major step toward becoming a "one-stop shop" for selling enriched uranium. In 2022, Cameco restarted its mining operations in McArthur River and Key Lake as uranium's spot prices bounced back.
In 2023, it partnered with Brookfield Asset Management (BAM +1.48%) to acquire the nuclear power plant designer and builder Westinghouse Electric. Its new 49% stake in Westinghouse should offset the volatility of its core mining business. That transformation from a pure-play miner into a more diversified nuclear energy play should make Cameco a more stable way to profit from the nuclear energy market's long-term growth. From 2024 to 2050, the International Atomic Energy Agency (IAEA) expects the world's nuclear capacity to increase by up to 2.5 times as more countries ramp up their nuclear expansion plans again.
NYSE: CCJ
Key Data Points
What are Cameco's near-term catalysts?
Cameco recently reduced its full-year output guidance for its McArthur River mine, citing delays caused by ground-freezing issues and other challenges. That might seem like a near-term headwind for Cameco, but it coincides with similar output cuts at Kazatomprom and other uranium miners.
That decreased production should actually drive up uranium's spot prices and boost Cameco's revenue and profits. For 2025, it expects its uranium revenue to rise 8% as it delivers 31 million pounds to 34 million pounds of uranium with an average realized price of approximately $87 per pound. That's higher than uranium's current spot price of about $80.
From 2024 to 2027, analysts expect Cameco's revenue and earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 8% and 90%, respectively. That growth should be driven by the expansion of the cloud and AI markets, a renewed interest in nuclear energy, the expansion of GLE's laser enrichment business, and its stake in Westinghouse. Newer nuclear reactor technologies -- including small modular reactors (SMRs) and microreactors -- could drive up that demand and make it easier to build nuclear plants in remote areas.
Cameco's stock isn't cheap at 52 times next year's earnings, but it has plenty of room to run as long as it isn't derailed by another nuclear disaster or global pandemic. Although it's a cyclical stock, it's still in the early stages of its current growth cycle. Its shares might remain volatile, but it could generate big long-term gains for patient investors.
