IBD Stock Analysis
- Cameco stock is back above a 19.81 buy point.
- Shares have also formed a high handle entry of 20.37.
- The relative strength line is hovering near recent highs.
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:39PM EDT on
The setup for the stock comes after the coronavirus pandemic constrained uranium production more than it did demand, and as more nations abroad plan nuclear-power projects while the U.S. sets its sights on cutting emissions.
Investors could also use 20.37 — the high the stock reached on May 10, plus 10 cents — as a high handle entry. A few days earlier, on May 7, shares of the company jumped after it reported earnings.
“Globally, we see demand for both traditional and nontraditional uses of nuclear power growing as the increasing focus on electrification while phasing out carbon intensive sources of energy continues to take hold,” CEO Tim Gitzel said in the company’s earnings release.
The stock’s relative strength line is hovering around the levels it hit in March. Those levels are the highest since 2017. But the line, which measures a stock’s performance against the S&P 500, is still not close to the all-time highs it reached in 2007 and 2008.
CCJ Stock And Nuclear Energy Interest
Cameco has mines in northern Saskatchewan and the U.S. It also has a 40% interest in a joint venture located in Kazakhstan, where a lot of uranium mining occurs. Nuclear plants use its uranium products to generate electricity.
Cameco last year suspended production at its Cigar Lake mine, in Canada, twice, due to the pandemic. The company in April said it planned to restart operations shortly. But Cameco said last week that a handful of people at the operation had tested positive for Covid-19, delaying reopening.
Bank of America analyst Lawson Winder, in a report last year, noted uranium had seen “much greater disruption to supply than to demand from Covid-19.”
At the same time, demand for uranium is seen rebounding in the years ahead, after natural gas and greener energy sources emerged as alternatives and older plants shuttered. China plans to build nuclear power plants. Other nations in the Middle East also intend to bring nuclear reactors online.
In the U.S., Reuters reported that the White House has indicated that it supports subsidies to prevent nuclear facility closures. Those subsidies could be incorporated into President Biden’s infrastructure plans, Reuters said.
“There’s a deepening understanding within the administration that it needs nuclear to meet its zero-emission goals,” a source told Reuters.
As that story noted, Biden, during his presidential run, said he would increase spending for research on new nuclear plants.
But it said the White House has run into difficulties devising a way to preserve existing reactors. Some prominent Democrats also remain at odds over whether expanding nuclear energy production is a good idea.
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