Why Cameco Shares Soared 18% in September and Could Go Higher

Canadian uranium miner shares Cameo (CCJ 0.31%) sizzle. Uranium stocks rose 17.5% in September, according to data from S&P Global Market Intelligence, and continue to rise. It’s up 37% in a month at the time of writing.

The focus is once again on the uranium industry, and Cameco has just announced capacity expansion plans. That could mean even bigger days ahead for the stock.

Uranium stocks are a bet on nuclear power

Cameco is one of the world’s leading producers of uranium, a key nuclear fuel used to power nuclear power plants. That largely explains why the stock has rallied in recent weeks following some interesting developments in the nuclear power industry.

To name a few, 14 global banks and financial institutions pledged support for nuclear power at an event in September. This should ideally mean easier financing for industry, which is crucial for the development of capital-intensive nuclear reactors.

In another major development, the utility giant Constellation Energy plans to restart a 1979-closed nuclear plant at Three Mile Island, Pennsylvania, after signing a 20-year power purchase agreement with the tech giant Microsoft in September. Oracle CEO Larry Ellison also last month announced plans to use nuclear power for its artificial intelligence (AI) data centers.

Meanwhile, Russian President Vladimir Putin last month announced plans to limit exports of commodities such as uranium and nickel in retaliation for US sanctions. If Russia makes a move, global uranium supply will be hit, and the prospect is already sending uranium prices higher. Uranium prices have fallen sharply this year on fears of a supply-demand imbalance, but are at their highest level in more than a month right now, pending an export ban from Russia, according to data from Trading Economics .

All of these factors combined have sent Cameco stock higher in recent weeks, but the rally may have just begun.

Why you should buy and own Cameco stock

In an interview with Bloomberg Television on Oct. 8, Cameco CEO Tim Gitzel called it the “best fundamentals” he’s ever seen for nuclear and revealed plans to expand capacity based on demand in increase in nuclear power. This is perhaps the biggest confirmation of the recovery of the uranium industry. Cameco is the best uranium stock to play the boom, and you’ll want to keep an eye on this stock, especially with its third quarter numbers scheduled for a November 7th release.