Cameco: A Pragmatic Calculation

The current enthusiasm for artificial intelligence is, predictably, creating demands upon the power grid. The machines require energy, and require it in increasing quantities. To ignore this is to court disruption. The question is not whether power consumption will rise, but how it will be met. The facile answers – wind, solar – are insufficient. They are intermittent, unreliable, and require extensive, and expensive, backup systems. Nuclear power, despite the lingering anxieties surrounding it, offers a more rational solution.

It is not a romantic vision, this reliance on the atom. It is, however, a practical one. Nuclear plants, unlike their renewable counterparts, generate electricity consistently. They require less land, and produce fewer emissions than fossil fuels. That large corporations – Microsoft, Alphabet – are entering into agreements with energy providers to secure nuclear power is not a sign of environmental zealotry, but of calculated self-interest. The U.S. government’s stated ambition to triple nuclear output by 2050 is equally devoid of sentiment; it is a recognition of necessity.

All of this translates, quite directly, into demand for uranium. And one company, Cameco (CCJ 0.38%), is exceptionally well-positioned to benefit. It is not a matter of faith or speculation, but of simple arithmetic. Cameco controls some of the richest uranium deposits on the planet – Cigar Lake and McArthur River – which require less processing than the lower-grade ores found elsewhere. This is not a technological marvel, but a geological advantage, and it confers a significant cost benefit.

The Business of Atoms

Cameco’s operation is, at its core, straightforward: they mine and refine uranium. It is a capital-intensive undertaking, certainly, but not particularly complex. In 2024, they supplied 17% of the world’s uranium – 160 million pounds. Kazakhstan’s Kazatomprom is larger, but the difference is not insurmountable. Furthermore, Cameco holds a 49% stake in Westinghouse, the manufacturer of the AP1000 reactor – the same reactor the U.S. government is investing heavily in. To suggest that Cameco will not be a primary beneficiary of this investment would be disingenuous.

The company’s recent performance reflects this growing demand. Revenue has grown at a compound annual rate of 2.6% over the last decade, accelerating to 24.2% over the last three years. Gross and net profit margins – 36.3% and 15.2% respectively – are impressive, particularly for a mining operation. These figures are not the result of clever accounting, but of a favorable market position and efficient operations.

The fact that Canadian energy imports, including uranium, were exempted from the tariffs imposed by the previous administration is a minor detail, but not insignificant. It adds another layer of security to the investment. Over the past year, Cameco has outperformed the S&P 500 by a factor of eight. While past performance is never a guarantee of future results, the current trajectory suggests that this trend is likely to continue.

To claim that Cameco is a ‘sure thing’ would be foolish. All investments carry risk. However, based on a pragmatic assessment of the current energy landscape, and the company’s demonstrable advantages, it appears to be a rational, and potentially profitable, allocation of capital. It is not a matter of hope, but of calculation.

2026-01-23 00:22

The Business of Atoms

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