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Do you have uranium stock? This segment has taken off in the last few months. But is this rally a temporary radar blip or a sign of a major upcoming event?Let’s see if Kameko (TSX: CCO)(NYSE: CCJ) Especially ultimately guaranteeing the location of your portfolio.
Uranium prices are fluctuating: why is this important?
Uranium spot prices have exceeded $ 40 per pound since September. In fact, prices are currently over $ 45 per pound. This will increase the profitability of uranium miners such as Cameco. In addition, it also begins the process of eliminating low prices and weak demand for nearly a decade.
In that context, the uranium traded in excess of $ 45 almost 10 years ago. The aftermath of the 2011 Fukushima Daiichi accident drastically reduced demand for nuclear power and, by extension, uranium. A series of new reactors built around the world are helping to feed its resurrection.Its growth is mainly based on China, Russia and United Arab Emirates
But why is this important? Kameko is one of the largest uranium producers on the planet. The uranium is used as fuel for those reactors. The fuel is purchased under a long-term uranium contract that can last for a period of 10 years or more.
To counter its weak market, Cameco was forced to close its facilities and fulfilled contacts from existing supplies. The company has significantly reduced dividends and reduced its workforce to save cash. These painful efforts were made to survive the current storm.
Fortunately, the storm seems to be over. That said, improving prices alone is not a good buy for turtles and other uranium stocks.
Let’s talk about results and prospects
Cameco last provided a quarterly update in October. That quarter, the company reported a loss of US $ 72 million. After adjustment, the company reported a loss of US $ 54 million. By comparison, in the same quarter of 2020, Cameco reported a net loss of US $ 61 million. Adjusted losses expanded to US $ 78 million last year.
Overall, the company is in a much better financial position than it used to be. Cameco closed the quarter with $ 1.4 billion in cash with only $ 1 billion in debt.
But does this make Cameco a solid purchase?
There are some interesting signs to take from this recent update. The steady price increase of uranium is a clear indication of the increase in demand. Similarly, the steady emergence of new reactors around the world also means that Cameco may be able to win additional contracts.
Improving market conditions also means that Cameco may reopen its portfolio of closed mines. This includes the MacArthur River mine, one of the most abundant deposits on the planet. Reopening will incur additional costs, which may reduce some of the perceived opportunities.
Should I buy this uranium stock or look elsewhere?
In my opinion, Cameco is still Risky investment.. The company may be able to fully recover and even revive its once appetizing quarterly dividend, but that won’t happen soon. Inventories have already surged by more than 70% over the past year and have surged by more than 100% in the last 12 months. Before joining, future investors need to keep in mind the huge losses that Cameco continues to report. More importantly, investors need to be aware of what it takes to eliminate these losses altogether and put Cameco back in a growth position.
In short, unless you have a desire for extreme risk, the market has much better options for investing.Even better, many of those options offer Delicious dividend With a higher yield than the only 0.27% yield offered by Cameco.
Should I buy uranium stock?
https://www.fool.ca/2021/12/07/should-you-buy-a-uranium-stock/ Should I buy uranium stock?