The Inevitable & The Opaque

It is a commonplace observation, and one I find increasingly unsettling, that investors cling to certain equities with a tenacity bordering on the pathological. They believe, or perhaps merely hope, that these holdings will generate returns, or at least stave off the inevitable erosion of capital. Such faith, in a world governed by opaque forces, is… curious. I, too, maintain a few such positions, not from conviction, but from a grim acceptance of the systems at play.

The bedrock, as it were, is not a foundation of strength, but a carefully constructed resignation. The prevailing wisdom, endlessly repeated, suggests diversification into broad market indices. The S&P 500, a construct of statistical inevitability, is often touted as a safe harbor. It is a curiously passive strategy – to admit defeat before the game even begins, and simply align oneself with the prevailing current. The numbers, of course, support this surrender. Ninety-seven percent of actively managed funds, according to the latest SPIVA Scorecard, fail to outperform the index. A depressing statistic, but one that validates the futility of striving against the tide.

Thus, a portion of my portfolio is allocated to the State Street SPDR S&P 500 ETF Trust (SPY +0.76%). It is a mechanism for transferring wealth from those who believe they can beat the market to those who merely are the market. An expense ratio of 0.0945% is a negligible price to pay for this quiet acceptance of one’s place. The long-term trend, despite periodic convulsions, is upward. It is not a matter of skill, but of probability. The market, like a vast, indifferent bureaucracy, will eventually process all claims, though not necessarily to the satisfaction of the claimant.

The Question of Fuel

More troubling, however, is the matter of energy. The relentless demand for power, particularly to sustain the increasingly complex and insatiable appetites of artificial intelligence, requires a solution beyond the reach of incremental improvements. Fossil fuels, a temporary reprieve granted by geological chance, are demonstrably unsustainable. Renewable sources, while admirable in intention, lack the necessary density and reliability. This leaves us, inevitably, with nuclear power. A technology fraught with risk, yet increasingly unavoidable.

The projections are… unsettling. A tripling of nuclear production by 2050, driven by the demands of nations both pragmatic and ambitious. India, China, Turkey, Russia, Japan, South Korea – all are expanding their nuclear fleets. Seventy reactors under construction, another 115 planned. A vast undertaking, driven by a silent, implacable force. And all of this requires fuel. Specifically, uranium.

Cameco (CCJ +1.96%), a Canadian entity, currently controls a significant portion of the global uranium supply. In 2025, they produced 164 million pounds, representing 15% of the world’s total. Their rivals – Kazatomprom and Uranium One – are state-owned, subject to the whims of political expediency. Cameco, by contrast, operates within the logic of the market, a cold, calculating entity focused on maximizing profit. This is not a matter of ethics, but of efficiency.

Their assets – the McArthur River/Key Lake mine and Cigar Lake – are particularly valuable. High-grade uranium deposits, accessible at a relatively low cost. The economics are… compelling. Extraction costs of $14.84 to $15.43 per pound, while the spot price hovers around $90. A comfortable margin, sufficient to sustain operations and generate a profit. The JV Inkai mine, while lower grade, provides additional capacity. A diversified portfolio, designed to withstand fluctuations in demand.

Furthermore, Cameco is vertically integrated. They own a refinery, a conversion facility, and a fuel manufacturing plant. They control the entire supply chain, from extraction to processing. This provides a degree of insulation from external shocks. And their partnership with Brookfield Asset Management and Westinghouse, the producer of the AP1000 reactor, secures a long-term revenue stream. The U.S. government has pledged $80 billion toward purchasing these reactors. A guarantee of demand, regardless of market conditions.

The financial results are… satisfactory. Revenue grew 11% in 2025, adjusted net earnings soared 114%. Gross and operating margins remain healthy. A 27.8% gross margin, 17.8% operating margin, and 16.9% net profit margin. A capital-intensive industry, yet surprisingly profitable. The stock has increased 852% over the past five years. A remarkable performance, driven by a confluence of factors. I have no intention of selling. Not because I believe in the future, but because I anticipate the inevitable.

2026-02-25 14:16

The Question of Fuel

Read More