Cameco: The Uranium Powerhouse I'd Buy on Every Dip and Hold Through Any Energy Shock

Investors are zeroing in on energy, and for good reason. Coming into this year, the surge in energy demand, particularly from data centers, shows no signs of slowing. Meanwhile, escalating geopolitical tensions remind us of the fragility of our global energy supply chains.

The recent conflict in Iran has proven this, with disruptions in the Strait of Hormuz impacting up to 9.1 million barrels of oil per day, leading the International Energy Agency (IEA) to call it "the largest disruption in history."

Energy prices continue to swing rapidly amid uncertainty over the conflict. However, recent market volatility is an opportunity for investors, and one uranium powerhouse I'd buy on any dip is Cameco (NYSE: CCJ). The company has a strong presence in North America and should do well as the U.S. adds more nuclear reactors over the coming decades.

Here's what investors need to know about Cameco's long-term prospects.

Cameco owns high-grade uranium mines in North America

The United States nuclear industry is looking to pivot away from foreign uranium suppliers, notably Russia, which has historically supplied the U.S. with nearly one-quarter of its enriched uranium. This is where Cameco has its opportunity. The company has high-grade assets in the Athabasca Basin in Canada, which hosts some of the world's largest uranium deposits.

The company owns a majority stake in McArthur River and Cigar Lake, two of the world's highest-grade uranium mines in Saskatchewan, which are supported by a network of roads and electricity and by fully permitted and licensed mills. Because the ore is high-grade, Cameco achieves low unit operating costs over the life of its mines, of $20.31 per pound at McArthur River and $21.12 per pound at Cigar Lake.

New nuclear power plants will be a strong tailwind for Cameco

In addition to its high-grade mines, Cameco has a 49% interest in Westinghouse Electric, one of the top nuclear suppliers of equipment and services to almost half of the operating nuclear power plants worldwide.

Image source: Getty Images.

This gives Cameco exposure across the nuclear value chain, making it more than just a uranium mining company. Through Westinghouse, Cameco has a stake in downstream fuel fabrication, reactor maintenance, and the design and engineering of new reactors. Last year, Cameco's share of Westinghouse's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) surged 61% year over year to $780 million.

Cameco, its co-investor Brookfield Renewable, and Westinghouse Electric have partnered with the U.S. government to build at least $80 billion in new Westinghouse reactors. Westinghouse's AP1000 nuclear reactors are in high demand, as the U.S. aims to have 10 new reactors by 2030. The partnership with the U.S. government should supercharge growth in Westinghouse's energy systems segment and fuel fabrication business for the life of these new reactors.

Cameco is an investment in the nuclear renaissance

Analysts project Cameco's earnings per share will grow to $2.30 by 2028, representing a 29% compound annual growth rate over the next few years.

As the top uranium miner in North America and an investor in Westinghouse Electric, Cameco is well positioned to benefit from the explosive energy demand from data centers and the decoupling from Russian uranium sources, making it a top nuclear energy stock to buy and hold for the long haul.

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