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There are a lot of companies to consider when you’re looking for a good uranium stock to invest in. And frankly, you should be investing in this commodity. Uranium is going to be what powers the energy transition from oil and gas to renewable energy.
In fact, about 20% of power in the United States is derived from nuclear reactors. And those reactors in turn are powered by uranium.
Furthermore, the world over is looking to build even more reactors. Over the next few years, dozens of new reactors are set to pop up in Asia, Europe, Russia, and India. Many are already under construction. And yet uranium is already in high demand.
Which is why it’s time to consider buying the top uranium stock out there.
The uranium stock to buy now
If you’re thinking of buying a uranium stock, you likely have already considered Cameco (TSX:CCO), and it’s clear why. It’s currently the largest publicly traded uranium company in the world. It was also the second largest uranium producer as of 2015, accounting for more than 18% of world production.
If you’re slightly hesitant to buy Cameco stock, I get it. The company went through a volatile period recently when WallStreetBets eyed up the stock. The Reddit channel pushed shares higher and higher, and of course, those shares then came crashing down.
Yet now is a good time to consider this uranium stock once more. Why? Let’s get into that next.
Long-term love, short-term hate
Most recently, Cameco got heat for a US$2.2 billion acquisition of a 49% interest in Westinghouse. The other 51% is set to be purchased for US$2.3 billion by Brookfield Renewable Partners LP (TSX:BEP.UN). And investors weren’t exactly happy with the news.
I get it. At a time of rising interest rates and high inflation, and a potential recession on the way, now doesn’t look like a great time to buy. However, this uranium behemoth is looking for long-term gains. And if it hopes to remain on top, it’s going to need it.
There is a finite supply of uranium right now. A supply that’s already in huge demand, and that’s only going to grow. Therefore, Cameco is going to need as much of this commodity on hand as possible. In fact, if things go well, the deal could merge and grow the uranium industry.
Sure, you could consider passing because of this purchase. Or you could consider this a great time to buy for a solid deal.
How much of a deal?
Shares of Cameco stock fell 17% from the acquisition news. In the last month, those shares are now down by 19%. However, the uranium stock is still up by 11% year-to-date, all during a time of poor market performance.
Take that into consideration, as well as its growing uranium supply, and strong balance sheet. Before the acquisition, it would have taken just 21.56% of its equity to cover all of its debts. That’s a strong position that shows it can afford such a purchase.
All put together, Cameco stock is one to buy while it’s down. Investors will certainly be thankful a decade from now, or even in the next year, when they bought at these low prices.
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