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Stock Strategist

The Market's Mispricing This Miner

Cameco should benefit meaningfully from a recovery in uranium.


We think the market is mispricing narrow-moat uranium miner Cameco (CCJ). Uranium offers a rare growth opportunity in metals and mining. China’s structural slowdown portends the end of a decade-long boom for most commodities--but not for uranium.

Uranium prices fell each year from 2011 to 2017, owing to the supply glut caused by delayed Japanese reactor restarts. This situation shouldn’t last much longer, with prices beginning to recover in 2018. We expect global uranium demand to rise roughly 40% by 2025, a staggering amount for a commodity that saw next to zero demand growth in the past 10 years. We expect new reactor capacity to drive the strongest uranium demand growth in decades. A quadrupling of China’s reactor fleet headlines this growth. China’s modest nuclear reactor fleet uses little uranium today. That’s set to change in a major way. Beijing is pivoting to nuclear in order to reduce the country’s heavy reliance on coal. New reactors in India, South Korea, and Russia as well as restarts in Japan lend additional support.

Kristoffer Inton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.