Cameco Stock Down to Below $90 -- Is Now the Time to Buy?

Cameco (NYSE: CCJ) stock has fallen below $90, closing at $85.69 on Oct. 1. That's a significant retreat for a stock that has traded as high as $135.24 over the past year. But the underlying nuclear story hasn't changed nearly as much as Cameco's stock price, which makes it worth a closer look at these levels.

Uranium demand remains strong

One thing you have to understand about Cameco is that it isn't simply a bet on uranium prices. Yes, it is one of the world's largest uranium producers, but it also operates nuclear fuel service businesses and owns 49% of Westinghouse, giving it exposure to everything from uranium mining to nuclear reactor servicing. That said, tight uranium supplies continue to give the company a strategic advantage.

Uranium-market consultancy UxC estimates that utilities have approximately 3.1 billion pounds of uncovered uranium requirements through 2045. Over the past five years, roughly 815 million pounds of uranium equivalent were consumed by reactors, while only about 589 million pounds were placed under long-term contracts. That gap could create plenty of opportunities for an established producer like Cameco.

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The company already has contracts covering average annual deliveries of more than 28 million pounds of uranium over the next five years. Earlier this year, Cameco also signed a nine-year agreement to supply India with nearly 22 million pounds of uranium, a contract valued at approximately $2.6 billion at the time of announcement.

The numbers aren't perfect

Cameco's latest results do help explain some of the recent weakness. Q2 adjusted EBITDA came in at roughly $279 million, while adjusted net earnings clocked in at around $55 million.

Both were lower than a year earlier, primarily due to lower earnings from Westinghouse, while lower planned uranium sales volumes also weighed on results.

There have also been operational headaches. Flooding in northern Saskatchewan disrupted Cameco's primary supply route to its McArthur River and Key Lake operations, while its Cigar Lake uranium mine temporarily suspended production for about two weeks following problems at Orano Group's McClean Lake mill. Cameco still maintained its 2026 uranium production guidance of 19.5 million to 21.5 million pounds attributable to the company. And the balance sheet remains solid. Cameco finished June with roughly $784 million in cash against $713 million in debt, plus another $713 million available through an undrawn revolving credit facility.

Is Cameco a buy below $90?

The biggest concern here is valuation. Even after falling below $90, Cameco stock isn't exactly cheap. You're still paying a premium for its exposure to rising nuclear demand, uranium supply constraints, and Westinghouse.

But Cameco also has something many nuclear stocks don't: large-scale uranium production and substantial existing revenue. It owns stakes in some of the world's highest-quality uranium assets, has long-term contracts in place, and maintains exposure to higher uranium prices as it signs new contracts. The company recently increased its ownership of Cigar Lake to 57.4%, too, further concentrating its portfolio around one of the world's most important uranium mines.

So the stock dropping below $90 doesn't eliminate the valuation risk. But if you believe nuclear power will continue expanding over the next decade, this pullback does provide a considerably cheaper entry point into one of the industry's most established companies.

Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cameco. The Motley Fool has a disclosure policy.