It's been quite an exciting ride for investors in Cameco (CCJ +0.32%), who have seen the stock rise 63% this year and more than 251% over the past three years. As the world once again embraces nuclear energy, Cameco is one uranium company that stands to benefit.
The U.S. government is making an effort to "unleash American energy." It's investing heavily in nuclear infrastructure and streamlining the approval process to meet the country's soaring energy demands.
Cameco's stock has recently pulled back from its 52-week high and is now 24% below that level, trading under $90. With nuclear energy having a revival, is the stock a smart buy at this price? Let's examine the company and its long-term opportunities to find out.
Soaring demand creates a need for more energy
Energy demand is soaring, driven by the explosion of power-hungry data centers running artificial intelligence (AI) algorithms. According to a Goldman Sachs report, data center power demand is expected to account for 8% of total U.S. demand by 2030, up from 3% just two years ago.
Not only will data centers drive energy growth, but demand across the board is expected to increase. Research from the Bank of America Institute projects that U.S. electricity demand will grow 2.5% annually, a rate five times faster than the previous decade, when demand grew 0.5% per year.
This surge in energy demand illustrates why the U.S. needs more infrastructure and why companies like Cameco stand to benefit.
The miner is well-positioned with its uranium assets
Cameco is one of the world's largest uranium producers, with assets in key uranium-producing regions in Canada and Kazakhstan. The company holds stakes in McArthur River (70% ownership) and Cigar Lake (55%), both of which are high-grade uranium mines in northern Canada. In the same area, it also owns an 83% stake in the Key Lake uranium mill, which processes ore to extract and concentrate uranium. In addition, it has a 40% interest in Joint Venture Inkai in Kazakhstan.
NYSE: CCJ
Key Data Points
Besides mines, Cameco holds a 49% stake in Westinghouse through a strategic partnership with Brookfield Renewable Partners. Westinghouse is an original equipment manufacturer of nuclear reactor technology and a global provider of products and services to commercial utilities and government agencies.
Recent news bodes well for the industry
Earlier this year, President Donald Trump signed executive orders to accelerate the deployment of nuclear power. Cameco, Brookfield Asset Management (Brookfield Renewable Partners' parent company), and Westinghouse Electric have partnered with the U.S. government to help in these efforts.
Image source: Getty Images.
As part of this partnership, they will build at least $80 billion in new reactors across the U.S. using Westinghouse nuclear reactor technology. The Westinghouse AP1000 reactor design is considered uniquely positioned to play a crucial role in the growing nuclear industry.
This partnership could pave the way for a major program of nuclear reactor building in the U.S. and Western-aligned countries. One Bank of America analyst raised his net asset value estimate for Cameco and applied a higher multiple, acknowledging the increasing growth potential from the miner's 49% interest in Westinghouse.
Cameco also benefited from reports in September that the Trump administration was recommending the U.S. increase its strategic uranium reserve to buffer against potential disruptions in Russian supplies.
Recent production cuts aren't a concern
In other news, Cameco announced a reduction in its 2025 production forecast. This is due to development delays and slower-than-anticipated ground freezing as the McArthur River mine transitions into new mining areas, which are expected to defer the extraction of projected amounts.
Production from its McArthur River/Key Lake operation is now anticipated to be between 14 million and 15 million pounds of U308 uranium, down from the previous forecast of 18 million pounds. Cameco's share of this is between 9.8 million and 10.5 million. However, strong performance at the Cigar Lake mine will help to partly offset up to 1 million pounds of the total shortfall.
Financial services firm Cantor Fitzgerald called the production guidance cut "immaterial," believing the shortfall is minor and will be recouped in 2026.
A play on the nuclear build-out
Cameco stands to benefit from the nuclear energy renaissance. The company holds key assets in high-grade uranium mines, while its investment in Westinghouse provides another avenue for growth.
One thing that may cause investors to balk at the stock is its valuation. It currently trades at 55 times this year's projected earnings, which is expensive for a mining stock. However, analysts project the company's earnings per share (EPS) will grow to $2.25 by 2028, representing 30% annual growth from 2025's projected EPS.
Although the stock is expensive, Cameco has a bright future, and more opportunities await it as the U.S. continues to build nuclear infrastructure. For these reasons, I think the recent dip is a good buying opportunity for investors.
