Cameco, the leader in its industry group, is the IBD Stock of the Day. The company is literally fueling portions of the AI data center boom.
Canada-based Cameco has operations from the start to the end of the nuclear-energy supply chain. It operates uranium mines in Canada, the U.S., Australia and Kazakhstan. In Canada, it has the world's largest commercial uranium refinery and the country's sole uranium conversion plant. The company also owns 49% of Westinghouse Electric, which helps operate nuclear power plants and is a leader in developing small modular reactor, or SMR, technology.
In an investor presentation, Cameco says it had 17% of the world's uranium production in 2024.
Nuclear power delivers a clean-burning and almost inexhaustible amount of electricity, which makes it an appealing choice to power the many data centers under construction or being expanded. The vast workloads associated with artificial intelligence are greatly increasing demand for data center capacity and the energy needed to drive that capacity. But that's not all.
Reshoring of manufacturing and supply chains, growing electrification and rising use of electric vehicles are also driving demand for electricity. This is causing utilities to diversify their generating assets, Wells Fargo Investment Institute Equity Sector Analyst Joe Buffa said in a report earlier this month.
"We see nuclear power largely holding share" amid uprates (maximum power output) and as a couple of facilities reenter service, Buffa added.
Mining Industry Leader
Cameco is the No. 1 stock in IBD's metal ores mining industry group, according to IBD Stock Checkup. It has perfect 99 Composite and EPS Ratings. Earnings rose 63%, 22% and 407% the past three quarters, according to FactSet. Sales climbed 33%, 24% and 47%.
The company's July 31 earnings report beat analysts' consensus views. Management kept its production forecast unchanged, as operations at a Saskatchewan mine may face ground freezing, labor and other problems. Cameco expects average uranium prices of $87 per pound this year, up from a previous estimate of $84.
The outlook for its Westinghouse business is bright. It forecast adjusted EBITDA of $525 million to $580 million from a previous estimate of $355 million to $405 million. Over the next five years, Cameco expects adjusted EBITDA will grow at a compound annual growth rate of 6% to 10%.
Analysts expect full-year sales to climb 13% to nearly $2.5 billion, with earnings surging 148% to $1.17 a share in U.S. currency, per FactSet.
The ores mining group is No. 2 among IBD's 197 industry groups after rising 26% year to date. Shares of Cameco are up more than 52%.
Cameco Stock Analysis
Cameco stock is finding support after a pullback to the 10-week moving average. The pullback helped the stock consolidate its 130% rally from early April and included a bullish price reversal last week. The stock is actionable now as it rises above a trendline touching the highs since shares peaked around 80. In addition, Cameco appears to be forming a flat base with an 80.32 buy point.
The relative strength line is more or less keeping up with the stock price, a good sign.
Cameco stock has a 21-day average true range (ATR) of 3.85%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
Cameco stock was added to IBD Swing Trader Thursday.
