Here's What a $10,000 Investment in Cameco 5 Years Ago Is Worth Today -- and What the Next 5 Years Could Look Like
Key Points
The Canadian uranium miner has several mines with high-grade deposits.
The company has a 49% stake in Westinghouse.
Cameco is the largest uranium miner in North America.
If you had bought $10,000 worth of Cameco (NYSE: CCJ) 10 years ago and reinvested its dividends, you would have $107,627.06 today. That's an amazing 26% annual return rate that aligns with high-growth tech stocks over the same period.
Cameco, however, is not a tech stock but a uranium miner that also provides uranium production and refining services.
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The stock, despite its decade-long rise, is down more than 5% this year. Still, the next five years could see another surge in the stock. Here's why.
Image source: Getty Images.
The high demand for uranium
Analysts see the company's revenue and earnings per share rising at a mid- to high-double-digit compound annual growth rate (CAGR) over the next five years as the company's long-term contracts convert higher market prices into cash flow.
The average price target for the stock is $126.88, compared to its current price of around $86.67.
Cameco has locked in commitments requiring average deliveries of more than 28 million pounds of yellowcake uranium per year. That number is expected to rise as more data centers use nuclear power to deliver consistent, continuous power.
The Canadian company is the largest uranium miner in North America and has two high-grade uranium deposits in Saskatchewan, Canada: McArthur River/Key Lake and Cigar Lake. These deposits have relatively low production costs, thanks to innovative, low-labor-intensive methods such as jet boring and raise boring.
Westinghouse's IPO will help Cameco
When Westinghouse Electric Company completes an initial public offering (IPO), possibly as early as October, the market valuation and transaction structure will unlock significant strategic, financial, and balance sheet benefits for Cameco. It owns 49% of Westinghouse, alongside Brookfield Renewable Partners, which has a 51% stake in Westinghouse.
Bloomberg News estimated that Westinghouse's IPO could be worth more than $50 million, which some are saying could be worth CA$24 billion to Cameco, which is a great return for its original $2.1 billion investment in 2023.
It will be hard to repeat the past five years' performance
There are a lot of tailwinds for the company's revenue. Despite that, it will be difficult for the company to repeat its performance of the past 10 years.
However, if the company can achieve mid-to-high double-digit returns, including reinvested dividends, $10,000 invested in the stock today could easily be worth $17,000 to $22,000 in five years.
James Halley has positions in Brookfield Renewable. The Motley Fool has positions in and recommends Cameco. The Motley Fool recommends Brookfield Renewable. The Motley Fool has a disclosure policy.