Why Cameco Stock Popped Today

Key Points

• Cameco is rising on a confluence of factors today. Reason No. 1: The Federal Reserve may lower interest rates.

• Also working in Cameco's favor are two recent price target hikes from Wall Street.

• Finally, uranium prices are on the rise.

• 10 stocks we like better than Cameco ›

Shares of Cameco (NYSE: CCJ), a Canadian uranium mining company, jumped 3.9% through noon ET on Friday -- and the reason is anybody's guess.

That's not to say there's no reason for Cameco stock to be up today. Rather, there are multiple reasons -- and you can take your pick which one you favor.

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Image source: Getty Images.

Reason 1: The Fed

The biggest reason, and the reason why most stocks are going up today, is glaringly obvious. Out in Wyoming, at the Jackson Hole Federal Reserve conference, Fed Chair Jerome Powell just told investors that because of a weakening economic outlook and tepid job growth, the Fed might decide to lower interest rates in September as investors, and President Donald Trump, have been asking it to do.

Interest rate hikes are generally considered good for stocks and, well, Cameco is a stock.

Reason 2: Wall Street

Two different analysts have raised their price targets for Cameco stock over the past two days. According to StreetInsider.com, Raymond James hiked Cameco stock to 120 Canadian dollars yesterday, and today, National Bank Financial hiked it to CA$115.

Neither bank gave us much of an explanation for hiking, but I think we can guess.

Reason 3: Uranium price

Uranium prices that plummeted in late June have been gradually rising ever since, and are currently up $3 per pound from their July 18 low. This is of course good news for a uranium stock like Cameco.

Is Cameco stock a buy?

Still, both prices and demand have to grow a lot to make this stock a buy. Cameco shares currently cost some 47 times trailing free cash flow, and their price-to-earnings ratio is an astounding 80.

To me, that sounds kind of expensive, but apparently I'm in the minority on that view today.

Should you invest $1,000 in Cameco right now?

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Cameco. The Motley Fool has a disclosure policy.