Compared to renewable energy sources like wind or solar, uranium may seem less “green,” but nuclear energy, which uses uranium as a core fuel, generates about 10% of the world’s total electricity and is zero-carbon. In recent years, as global demand for clean energy has increased, uranium continues to play a crucial role in the future energy landscape. Consequently, shares of Canadian uranium miner Cameco Corp (TSX: CCO) have risen by 16% over the past year.
Cameco currently has a market capitalization exceeding 24 billion Canadian dollars, operating cash flow of over 700 million Canadian dollars, and a current ratio of 3.2, indicating its capability to meet short-term liabilities. Additionally, the company’s quarterly revenue grew by 24.2% year-over-year, reflecting the persistent demand for uranium.
In recent years, investing in renewable energy has become an irreversible trend. As climate change concerns intensify, the international community is calling for a reduction in greenhouse gas emissions. Renewable energy sources like solar, wind, geothermal, and hydropower not only effectively reduce carbon emissions but also help countries achieve the climate goals set by the Paris Agreement and promote sustainable development. At the same time, the widespread and dispersed nature of renewable energy sources helps reduce reliance on fossil fuels and enhances energy security.
In 2022, global investment in renewable energy reached an astonishing $495 billion, a 10% increase from the previous year, with solar energy’s annual growth rate reaching 20%. In addition to high growth, the profitability of renewable energy projects has surpassed traditional energy investments. For example, solar projects in sunny regions can offer returns on investment ranging from 6% to 8%, exceeding many fossil fuel projects. Moreover, government incentives and subsidies have increased the financial returns on renewable energy investments.
Cameco is one of the world’s largest uranium production companies, responsible for the mining, processing, and sale of uranium. Since uranium is the main fuel for nuclear power generation, Cameco’s resources and production have a direct impact on the global nuclear power supply chain. The company ensures stable supply through its mining operations in Canada, the United States, and other regions, supporting the nuclear energy needs of several countries.
Cameco’s current price-to-earnings (P/E) ratio stands at a high 69, reflecting investors’ high expectations for its future earnings growth. This optimism is mainly due to the projected growth in nuclear capacity worldwide, especially in Asia. Additionally, Cameco is actively embracing new nuclear technologies, such as the development of small modular reactors (SMRs), opening new possibilities for future nuclear energy applications.
However, every investment carries risks. Fluctuations in uranium prices and geopolitical tensions in mining regions could affect Cameco’s profitability. In terms of dividends, Cameco’s annual dividend yield is only 0.2%, but with a payout ratio as low as 20.3%, there is significant room for future dividend growth. Furthermore, with institutional investors holding over 76% of the company’s shares, it shows they are optimistic about its long-term prospects.
