Cameco: A Spot of Uranium, What Ho!

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One finds oneself increasingly convinced that the modern world, with its infernal contraptions and ever-growing thirst for electrical wizardry, is rather like a particularly demanding aunt – constantly requiring refreshment and prone to fits if denied. And what, pray tell, is to refresh this aunt? Nuclear power, of course! Demand is, as they say, on the upswing, fueled by these new-fangled artificial intelligence contraptions and a general desire to avoid relying on chaps one wouldn’t trust with a cricket bat. It’s a dashedly complicated situation, but a golden opportunity for a firm named Cameco, a Canadian enterprise with a rather keen eye for uranium.

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A Rising Tide of Uranium, By Jove!

The demand for uranium, you see, isn’t simply a matter of needing the stuff; it’s a question of how one goes about acquiring it. Utilities, once content to operate on a ‘just-in-time’ basis – a rather precarious arrangement, if you ask me – are now embracing a more sensible strategy: stockpiling. Long-term contracts have surged by a most agreeable 40% in the last year alone, often at prices considerably above the current spot rate – a situation that suggests a certain amount of foresight, wouldn’t you agree?

Furthermore, many countries are extending the operational lives of existing reactors, a sensible move that rather throws a spanner in the works of previous calculations. These reactors, previously destined for retirement, now require fuel for at least another two decades, creating a demand that was, shall we say, unanticipated. Cameco, as of September 30th, has commitments for over 28 million pounds of U3O8 annually from 2025 to 2029, with the bulk of deliveries scheduled before 2027 – a most reassuring state of affairs.

They anticipate an average realized price of around $87 per pound in 2025, a considerable improvement over last year’s $79.70. And, though spot prices may be a trifle lower, private contracts are reportedly fetching a handsome $100 per pound. A most satisfactory arrangement, wouldn’t you say?

Geopolitical Jitters and the Supply Situation

The case for investing in uranium miners isn’t merely about demand, you understand; it’s also about supply. And the supply situation, frankly, is rather like a particularly knotty problem in a crossword puzzle. The recent unpleasantness involving Russia has thrown a bit of a wrench into the works, with Western utilities understandably keen to disentangle themselves from Russian supplies.

The Prohibiting Russian Uranium Imports Act, signed into law in May of 2024, is causing a bit of a stir. Waivers are available, naturally, but they expire on January 1, 2028, leaving utilities scrambling for alternative sources. Russia, you see, historically supplied about a quarter of the U.S. reactor fleet’s fuel. The result? Increased competition for a limited supply from Western miners. Cameco, with its two high-grade mines in Saskatchewan – McArthur River and Cigar Lake – is, shall we say, rather well-positioned to benefit from this state of affairs.

Westinghouse and the Nuclear Build-Out

Simply extending the lives of existing plants isn’t quite enough, you see. One must also build new ones. And that’s where Westinghouse comes in – a top-notch firm that builds nuclear power plants and provides all sorts of helpful services, from maintenance to engineering support.

Cameco, cleverly enough, holds a 49% ownership stake in Westinghouse, along with Brookfield Renewable Partners. In October, the three firms entered into an $80 billion agreement with the U.S. government to support the construction of new reactors. This stake in Westinghouse provides Cameco with exposure to various aspects of the nuclear value chain, beyond mere uranium prices. They capture a share of Westinghouse’s service, maintenance, and construction profits, and, through the first three quarters of 2025, Cameco’s share of Westinghouse’s adjusted EBITDA surged 78% year-over-year to $569 million – a truly remarkable figure.

A Long-Term Proposition, What Ho!

Cameco’s long-term prospects, therefore, stem from rising demand, dwindling supply, and the construction of nuclear infrastructure. The stock isn’t cheap, naturally, but analysts predict earnings growth of 48% next year and another 33% the following year.

And, in 2028 and beyond, with those Russian uranium waivers expiring, I suspect we’ll see a continued upward trend. Despite its somewhat lofty valuation, it may be worth considering Cameco today, given its structural advantages and the tailwinds it’s likely to encounter. A dash of uranium in one’s portfolio, what could be more sensible?

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2026-01-21 13:22