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Sunday, December 4, 2022

Will Cameco Corporation (USA) (NYSE:CCJ) Sustain its Gains?

Cameco Corporation (USA) (NYSE:CCJ) is heating up in recent weeks as the entire Uranium sector heats up and sends these stocks flying. CCJ saw a recent high of $22 which is currently the price to beat for confirmation of next let up.

The sector is heating up as investors buy up stock in Uranium Companies across the board; Nuclear power is projected to be one of the world’s fastest-growing energy sources this year.

Cameco Corporation (USA) (NYSE:CCJ) is one of the world’s largest uranium producers, responsible for around 15% of the global uranium production. The Company is a significant supplier of conversion services and one of two CANDU fuel manufacturers in Canada. CCJ biggest strength is that it can produce Uranium lower than anyone else giving them a massive advantage.

CCJ biggest holding is the McArthur River Uranium Mine which they won 70% of. Located in northern Saskatchewan, Canada, the mine is the world’s largest high-grade uranium deposit. Cameco has more than 43 million pounds of proven and probable reserves and they are one of the only Uranium producers that stayed profitable during the last few years .

Cameco announced recently that unionized employees at the McArthur River mine and Key Lake mill operations have voted to accept a new collective agreement. This was significant for CCJ as the McArthur mine was closed during the strike.

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The 535 workers, represented by the United Steelworkers Local 8914, voted in favor of a new four-year contract that provides a 12% wage increase over the term of the agreement which expires on December 31, 2017.

Uranium prices collapsed 3 years ago after the Tsunami in Japan led to the Fukushima nuclear disasters. Investors foolishly gave up on it and Uranium fell below $30 per pound, less than half of the $65 it reached at its peak in 2011.

While still seriously depressed the price of Uranium is rising quickly and suddenly wall street is waking up and realizing that Uranium might just be the hottest ticket in town; common sense tells you that with the demand for electricity exploding globally coupled with shrinking supplies of fossil fuels Governments will turn to Nuclear Energy and the demand for Uranium will explode.

Globally there are 70 new nuclear reactors currently under construction all of which 29 are being built in China, 6 in India, and more than 9 in other Asian countries.

The catalyst for the recent run on Uranium was caused by H.C. Wainwright analyst Jeffrey Wright assertion that uranium spot prices could rise above $50/lb. over the next 12 months and the recent announcement by the Japanese Government that it will restart of the two-reactor Sendai nuclear plant operated by Kyushu Electric.

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Conclusion: CCJ is trading higher as Uranium spot prices move up sharply and an entire industry that has been depressed for the past 3 years, wakes up, gets hot and starts giving back big gains to investors. With Uranium still under $40 per pound it still has plenty of room for explosive short term growth.

Cameco is one of the best ways to capitalize on exploding Uranium spot prices; not only is the stock price seriously depressed here still trading for less than half of 2011 levels, the Company is one of the largest producers of Uranium in the world with lower production costs then the competition. As the market for Uranium explodes globally and it’s going to Cameco is going to be the Uranium play that everyone wants a piece of.

Disclosure: we hold no position in CCJ either long or short and we have not been compensated for this article.

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