Cameco: A "Home Run" Trade In Uranium

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I’m still finding attractive trading opportunities. One of them is Cameco Corp. (CCJ) — an energy play that most investors have missed. Cameco is a Canadian company that is based in Saskatoon, Saskatchewan, and it is one of the world’s largest providers of uranium.

Its operations have the capacity to produce more than 53 million pounds of uranium concentrate annually, backed by 455 million pounds of proven and probable reserves. Utilities around the world rely on its products to generate safe, reliable, and carbon-free energy.

The United States has announced a goal to cut up to 52% of its greenhouse gas emissions by 2030. And the global demand for nuclear power is growing, as more countries are committing to net-zero carbon goals. This may surprise many. But, it has been a decade since the Fukushima disaster in Japan caused many to rethink this vital energy source.

Nuclear represents about 10% of annual worldwide electricity generation. And, with climate concerns on the rise, demand for nuclear power will only grow, especially given the new class of nuclear reactors available -- from companies like TerraPower — that have more reliable cooling systems.

Bill Gates calls nuclear “the safest form of power generation when analyzed by deaths per unit of electricity generated.” Even Barron’s recently noted, “Looking ahead, global uranium demand is set to outpace production.”

Cameco is the best way to play it. Yes, sales and earnings have been down recently. But, that’s about to change. I estimate that Cameco's earnings per share will more than triple from $0.19 this year to approximately $0.75 in 2022. Moreover, the company is well financed with manageable debt and more than $1 billion in cash on hand. By the time most investors realize that nuclear demand is growing, shares of Cameco will be trading substantially higher.

So, pick up Cameco Corp. at market and place a sell stop at $14.50 for protection. If you prefer to play this one more aggressively, try the CCJ September $25 calls, which last traded at $1.05 and expire on Sept. 17.

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