Why Did Cameco Stock Fall 5.3% Today?
Key Points
Cameco inked a deal with the U.S. Commerce Department and an asset management firm to build $80 billion worth of nuclear reactors.
The company's CEO clarified the government's role in the deal after speculation swirled it would take a direct hand in Cameco's core business.
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Shares of Cameco (NYSE: CCJ) fell on Thursday, finishing the day down 5.3%. The move came as the S&P 500 (SNPINDEX: ^GSPC) lost 1.1% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) dropped 1.9%.
Cameco, the world's largest provider of uranium, saw its stock fall after its CEO clarified the U.S. government's role in a massive deal announced last week.
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The U.S. government is interested in Westinghouse
Last week, Cameco and Brookfield Asset Management announced a new partnership with the U.S. Commerce Department that will see new nuclear reactors built worth an estimated $80 billion. The reactors come from Westinghouse Electric Company -- owned jointly by both companies.
Image source: Getty Images.
The announcement sparked rumors that the federal government could take a direct role in supporting Cameco as it has with several strategically important companies to date, such as its equity stake in Intel. However, CEO Tim Gitzel clarified during Wednesday's earnings call that "the U.S. government partnership interest does not extend to Cameco's core business," saying that he needed to "directly address some of the misinformation we've seen published in the last few days."
Nuclear is in demand
While it may not be the beneficiary of a direct investment, Cameco still stands to gain considerably from the deal, and the company is in a key position to capitalize on the current spike in demand for nuclear energy. I think this is a stock you want to own.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Brookfield Asset Management and Intel. The Motley Fool recommends Cameco and recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.
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