Cameco Corporation (CCO.TO)

We think the uranium sector does still have room to run, and CCO is seen as the large cap 'go to' stock for global investors within the sector. It's not perfect (investors don't like its hedging programs) and not cheap on valuation, but EPS could potentially double this year and with good momentum in the sector it probably does go higher. 
Unlock Premium - Try 5i Free

Closed Westinghouse joint venture with BEP.UN. Now fully integrated with designing, building, and maintaining nuclear reactors. Two world-class uranium mines in Canada, production will increase next year. Uranium price has popped. Tailwinds to earnings, more upside. Benefits from ESG.

Inability to predict Uranium prices makes business hard to value. Returns on capital are choppy. Not an asset light business. Capex very high. Resource based company, so would avoid. Better options available for investors. 

It's run up 85% this year because uranium prices have soared.  CCO mines difficult terrain, so mining it is expensive. There's more demand than supply for uranium now. But commodity prices are unpredictable and CCO has had a huge run up.

Reported strong earnings yesterday. Has good assets in fine jurisdictions, but that isn't adding to their profitability, which lags the market. Also, shares have run up.

This sector is on fire. CCO does well in September through the new year. The world's nuclear conference happens in September, then buys happen after. CCO earnings are greatest in Q1, because the deals are made in Q4. Great earnings today. Costs are declining as uranium prices rise. Everything is working for them. The stock has broke out this year, no question. Has price momentum. There's nothing bad to say about CCO.

He bought at $12 and sold at a profit.. He forecasts 17% downside. It's at its valuation high. The risk/reward isn't there.

Great assets with strong business. Looking at smaller Uranium producers instead. Good for defensive investors. 

Biggest pure play on uranium. Bullish on uranium, as it's getting a rethink. Short-term supply is tight, prices are high. A bigger and better company than in past. Increasingly being added to ESG portfolios.

He bought it at $12. This current rally is over. Don't look at uranium now though he foresees an energy crisis.

The switch to renewables doesn't cover all the energy needs so nuclear will play a role in clean energy. Uranium prices should get even stronger.

Share price too high - displaying signs of exuberance.
Selling at current share price.
Uranium price at 12 year high.
Demand for nuclear energy rising.

Pre-eminent uranium play in the world. Not cheap given current fundamentals, so he can't recommend it right now. Long term, runway for uranium is good. Eventually, people will listen to a rational argument for nuclear, and this will push demand for uranium. Westinghouse partnership could, potentially, be very valuable.

Projects take a long time to build, super-long asset life. You need to have a really long time horizon for this one. Decades, not quarters. Positive interest in the space, which is positive for uranium and for CCO. 

Finally getting back to a pretty good baseline. Uranium industry will take a long time to ramp up. Cameco's mines in Canada are difficult to mine. Kazakhstan is now dominant supplier. Fully valued, at a 10-12 year high, take profits.