Is Cameco Corp. a Good Uranium Stock to Add to Your Portfolio?

NYSE: CCJ | Cameco Corporation  News, Ratings, and Charts

CCJ – The price of shares of the world’s largest uranium producer, Cameco Corporation (CCJ), has gained in triple digits over the past year with institutional and retail investors’ growing interest in the commodity. However, with relatively low profit margins and bleak short-term growth prospects, we think the stock looks highly overvalued at its current price level. So, will increased meme investor interest help the stock attain fresh highs soon? Read more to find out.

Headquartered in Canada, Cameco Corporation (CCJ) is the world’s largest publicly traded uranium manufacturer and supplier. The company has a licensed capacity to produce 53 million pounds of uranium annually because its operations are backed by 455 million pounds of proven and probable mineral reserves.

As a critical element in carbon-free nuclear energy production, yellow cake plays a vital role in clean energy production. With major economies investing heavily to increase renewable energy production in lieu of fossil fuels, CCJ is poised to emerge as a major supplier of uranium globally.

However, recently, uranium prices reached six-year highs, bolstered by Sprott Physical Uranium Trust’s immense buying spree. This, coupled with increased retail investor interest in the commodity, fueled by Reddit group r/UraniumSqueeze, has driven CCJ to a 123.6% price gain over the past year and 82.5% year-to-date.

While CCJ is well-positioned to move higher because of the Reddit-triggered short uranium squeeze, the company’s relatively low profit margins and bleak growth prospects indicate that the momentum might be short-lived.

Here’s what we think could shape CCJ’s performance in the near term:

Increasing Uranium Prices

Canadian company Sprott Asset in July launched commodity-based fund Sprott Physical Uranium Trust. Sprott has bought more than 24 million pounds of uranium through this fund, which is equivalent to approximately 14% of global yellow cake consumption. Last month, the fund launched an at-the-market equity program to raise $300 million to continue its uranium buying spree. And on September 10, the fund released a statement regarding the expansion of its at-the-market equity program by $1 billion, the proceeds of which are expected to be used to purchase uranium.

Also, retail investors have been actively trying to instigate a “Gamestop-like squeeze” in the commodity markets by acquiring mass volumes of uranium. Regarding this, Morgan Stanley analysts Marius van Straaten and Susan Bates said, “It is not a secret that investors’ newfound interest in uranium, predominantly through Sprott’s physical uranium trust, is the driving force behind its resurgence.”

According to a Bloomberg article, Horizons ETFs portfolio manager Nick Picquard expects uranium prices to rise 41.2% from $42.50 to hit $60 soon.

Stretched Valuation

In terms of forward EV/EBITDA, CCJ is currently trading at 229.73x, which is 2,886.1% higher than the 7.69x industry average. In addition, the stock’s 61.02 forward Price/Cash Flow ratio  is 1086.7% higher than the 5.14 industry average.

Also, CCJ’s 8.53 and 8.42  respective forward Price/Sales and EV/Sales multiples are significantly higher than the 1.27 and 2.43 industry averages.

Consensus Rating and Price Target Reflect Potential Downside

Of the eight Wall Street analysts that rated CCJ, five rated it Buy, and three rated it Hold. The $22.71, 12-month median price target indicates a 7.2% potential downside from yesterday’s $24.46 closing price. The price targets range from a low of $19.76 to a high of $30.04.

POWR Ratings Reflect Uncertainty

CCJ has an overall C rating, which translates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

CCJ has a D grade for Value. This is justified, given its higher-than-industry valuation ratios. However, it has an A grade for Momentum. CCJ is currently trading above its 50-day and 200-day moving averages of $18.15 and $18.22, respectively, in sync with the Momentum grade.

The stock has a grade of C for Quality. CCJ’s 31.47% trailing-12-month gross profit margin  is 22.9% lower than the 40.81% industry average, in sync with its  Quality grade.

Of the 39 stocks in the D-rated Industrial – Metals group, CCJ is ranked #25.

Beyond what we’ve stated above, we have rated CCJ for Growth, Sentiment, and Stability. Get all CCJ ratings here.

Bottom Line

CCJ’s momentum can be attributed to the increased retail investor interest in uranium stocks. Commodity’s prices are currently near their six-year highs. However, the company’s financials paint a different picture. Despite being the world’s largest publicly traded uranium company, CCJ’s profit margins are much lower than its peers’. Moreover, analysts expect the company’s revenues and EPS to decline 19.5% and 30.7%, respectively, year-over-year in its fiscal year 2021. Thus, we think investors should wait until CCJ’s fundamentals improve before investing in the stock.

How Does Cameco Corporation (CCJ) Stack Up Against its Peers?

While CCJ has an overall C Rating, one might want to consider looking at its industry peers, Ryerson Holding Corporation (RYI), Atkore International Group Inc. (ATKR), and Norsk Hydro ASA (NHYDY), which each has  an overall A (Strong Buy) Rating.

Note that ATKR is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.

Want More Great Investing Ideas?

9 “Must Own” Growth Stocks for 2021

SEVERELY Undervalued Stocks

Top 12 Stocks for the Rest of the Year

5 Stocks Ready to BREAKOUT!


CCJ shares were trading at $23.78 per share on Tuesday morning, down $0.68 (-2.78%). Year-to-date, CCJ has gained 77.46%, versus a 19.83% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CCJGet RatingGet RatingGet Rating
RYIGet RatingGet RatingGet Rating
ATKRGet RatingGet RatingGet Rating
NHYDYGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

2022 Stock Market Outlook

The stock market (SPY) has continued on a bullish path in 2021. Will that continue in 2022? And what could happen to awaken the bear market from hibernation? 40 year investment veteran Steve Reitmeister explores this and more in this early edition of his 2022 Stock Market Outlook. Read on for full details below...

:  |  News, Ratings, and Charts

How Recent Bearish Sentiment Will Impact the Stock Market

Last week, the S&P 500 (SPY) fell during a short trading week. Multiple factors were weighing on investor sentiment. First was September's history for being a weaker month for stock performance. In addition, the previous week's August payrolls miss seemed to linger on investors' minds due to concerns that the delta variant of COVID was slowing the rebound in the economy. The real estate sector led declines as long-term interest rates increased. Consumer staples and utility stocks performed the best. In terms of market cap, the small-cap Russell 2000 Index underperformed the market after two strong weeks of outperforming the larger benchmarks. Growth stocks also outperformed Value stocks. I’ll discuss this and more below…

:  |  News, Ratings, and Charts

How to Turn Low Priced Stocks into BIG Winners?

Some investors are into growth stocks...some prefer value stocks while others are into momentum, income, chart patterns, insider trading and more. But one area that most investors agree upon is the great appeal in buying low priced stocks. Like those under $10 given the potential that prices soar and you easily beat the stock market (SPY). Read on to discover our brand new strategy for selecting low priced stocks that has led to a surprising +62.88% average annual return. Get the rest below...

:  |  News, Ratings, and Charts

3 Growth Stocks You Can Buy at a Reasonable Price

Even with growth stocks falling last week, investors are still pouring money into companies with strong growth potential. When you add in a value component, you get the best of both worlds. That's why investors should consider growth at a reasonable price stocks such as Westlake Chemical Corporation (WLK), ManpowerGroup (MAN), AutoNation, Inc. (AN).

:  |  News, Ratings, and Charts

How to Turn Low Priced Stocks into BIG Winners?

Some investors are into growth stocks...some prefer value stocks while others are into momentum, income, chart patterns, insider trading and more. But one area that most investors agree upon is the great appeal in buying low priced stocks. Like those under $10 given the potential that prices soar and you easily beat the stock market (SPY). Read on to discover our brand new strategy for selecting low priced stocks that has led to a surprising +62.88% average annual return. Get the rest below...

Read More Stories

More Cameco Corporation (CCJ) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CCJ News