Environmentalists and anti-nuke crusaders, look away. You're probably not going to like much of anything that I have to say about Canadian uranium processor Cameco
Results for the first quarter were another byproduct of a very strong market in uranium. Although it might seem counterintuitive given the state of new nuclear facilities in the U.S., uranium has been pretty strong in recent times -- after all, the plants that are operating still need fuel. In any event, revenue rose 151% this quarter, and reported net earnings were up more than four times year-ago levels.
The company's core uranium business had a strong quarter. Revenue more than tripled as Cameco coupled an unusually high level of deliveries with a 29% increase in realized prices. Elsewhere, fuel services chipped in good revenue growth but lower pre-tax earnings, while the electricity business experienced significantly better earnings. It's also worth noting that Cameco has a large stake in a gold company, and we all know that the gold market has been strong of late.
Part of what makes Cameco unique as a stock is the scarcity of other pure plays on uranium and nuclear power. Sure, Rio Tinto
And perhaps that scarcity is part of the problem. True, I expect more nuclear plants to be built in the coming years, but this stock's performance would already seem to account for a great deal of that. Plus, there is the familiar bear case in any resource-driven story -- that supply is catching up to demand -- and that could make for weaker pricing in the future.
Cameco could be a fine company at the right price, but for today's buffet of energy stock ideas, I think coal, natural gas, and maybe even oil have more bargains amidst their numbers.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).