If I Could Only Buy 1 Nuclear Stock for the Next Decade, It Would Be This One

Energy is the lifeblood of the economy, and demand is projected to accelerate. Artificial intelligence (AI) data centers require a vast amount of electricity. At the same time, the U.S. is taking steps to reshore manufacturing and electrify its power grid, and nuclear energy is being embraced as a baseload, carbon-free power source.

The U.S. has a massive fleet of 94 nuclear reactors. On top of that, the Nuclear Regulatory Commission is extending plant lifespans, utilities are adding more nuclear capacity through uprates and upgrades, and the U.S. aims to have 10 large-scale nuclear reactors under construction by 2030.

As a result, nuclear energy should benefit from powerful, multi-decade tailwinds as countries worldwide triple their nuclear capacity, driving strong demand for uranium, nuclear fuel, and nuclear components and equipment.

If I could only buy one nuclear stock to hold for the next decade, Cameco (NYSE:CCJ) would be my choice. Here's why.

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Cameco owns high-quality assets for mining, refining, and processing uranium

Cameco is well known for its massive uranium mining footprint. The company has investments in high-grade uranium mines in Saskatchewan, Canada, at both McArthur River and Cigar Lake, which have a combined licensed capacity of 43 million pounds per year. In addition, Cameco partners with Kazatomprom and owns 40% of JV Inkai, a low-cost in-situ recovery operation in Kazakhstan with a licensed capacity of 10 million pounds per year.

In addition to mining, Cameco owns the Key Lake mill, where it separates uranium minerals from rock and concentrates them into a transportable product called yellowcake. From there, Cameco converts the yellowcake into a gaseous or ceramic chemical compound, depending on the reactor technology at its Port Hope conversion facility.

Cameco sells its uranium through long-term contractual agreements, helping lock in revenue while insulating it, to some degree, from fluctuating uranium prices. The company has contracts to deliver 28 million pounds per year over the next four years, but has structured them so that there is more uncommitted volume in the latter half of the decade to capture potential upside from rising uranium prices.

Cameco stands to benefit from growing demand for nuclear fuel and reactors, too

Cameco doesn't just mine, refine, and process uranium. The company also holds a 49% ownership stake in Global Laser Enrichment, which develops laser isotope separation technology for uranium enrichment. The company is pre-revenue and early-stage and likely won't generate revenue until the 2030s, but it provides Cameco with upside potential from near-shoring uranium enrichment.

On top of that, Cameco benefits from the nuclear build-out thanks to its 49% stake in Westinghouse Electric. Westinghouse manufactures the AP1000 large-scale nuclear reactors used in many of today's nuclear power plants. Westinghouse also provides engineering, maintenance, and reactor design services and should benefit from the expansion of nuclear capacity in the coming decades.

Nuclear energy is enjoying a resurgence, and Cameco is a top company that should benefit across the value chain. With its stock down 46% from its 52-week high, Cameco looks like a buy-the-dip candidate for investors bullish on nuclear energy's long-term outlook.

Courtney Carlsen has positions in Cameco. The Motley Fool has positions in and recommends Cameco. The Motley Fool has a disclosure policy.