1 month ago
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Leo Sun, The Motley Fool
Tue, Apr 29, 2025, 6:45 AM 4 min read
In This Article:
The spot terms for uranium, the important constituent for producing atomic power, has astir doubled implicit the past 5 years. That maturation was fueled by the world's renewed involvement successful atomic powerfulness arsenic a cleanable vigor source, geopolitical conflicts driving much markets distant from fossil fuels, and accelerated enlargement of the power-hungry artificial intelligence, cloud, and information halfway markets.
Bank of America expects uranium's spot terms to astir treble from astir $67 per lb contiguous to $120 by the extremity of 2025, past emergence to $135 successful 2026 and $140 successful 2027. At the extremity of 2024, the International Atomic Energy Agency (IAEA) predicted the world's atomic capableness could summation 2.5 times from its existent capableness by 2050 successful a "high lawsuit scenario."
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One of the astir straightforward ways to nett from that atomic supercycle is to put successful Cameco (NYSE: CCJ), 1 of the world's starring producers of uranium. The Canadian miner produced astir 5% of the world's uranium successful 2023, and it's the largest publically traded uranium miner.
It operates mines and mills crossed Canada, the United States, and Kazakhstan. The company's banal terms has already surged much than 330% implicit the past 5 years, but volition it caput adjacent higher implicit the adjacent 12 months?
Cameco, similar different miners, is tightly tethered to the cyclical terms swings of its underlying commodity. Moreover, macro headwinds, tariffs, commercialized tensions, and geopolitical conflicts could disrupt its mining operations.
The spot terms of uranium really roseate successful 2020 and 2021, but the pandemic forced the institution to suspend immoderate of its mining operations. That's wherefore its gross declined successful some years arsenic it turned unprofitable connected an adjusted basis.
| Revenue growth | (3%) | (18%) | 27% | 39% | 21% |
| Gross margin | 5.9% | 12.5% | 0.1% | 21.7% | 25% |
Data source: Cameco.
But aft that setback, the concern recovered implicit the pursuing 3 years arsenic the pandemic passed, Its gross margins expanded, and it turned profitable (on an adjusted basis) again.
To trim its semipermanent volatility and summation its vulnerability to the increasing atomic powerfulness market, Cameco partnered with the Canadian infrastructure concern institution Brookfield Asset Management (NYSE: BAM) to get Westinghouse Electric -- a cardinal designer, builder, and supplier of atomic powerfulness plants -- successful precocious 2023. Cameco present owns 49% of Westinghouse Electric, portion Brookfield owns the remaining 51%.
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