Why Cameco shares rose 8% on Friday

Uranium stocks glow green on Friday, and they did Constellation Energy to thank for that. This morning, the electric utility giant announced plans to restart Unit 1 at the Three Mile Island nuclear power plant by 2028 to provide electricity to Microsoft data centers.

In the shortest time flat, shares of uranium mining stocks such as Energy fuels, Uranium energyand Denison Mines started to turn on. Neither went that far Cameco Corporation (CCJ 8.06%)however, which as of 11:10 a.m. ET is gaining 8%.

Why Cameco Stock Is Glowing Green Today

It’s not a big mystery why. A large electric utility is restarting a nuclear plant, and that plant will need uranium to generate power. Uranium miners supply that uranium — and so their stocks rise.

But this story is even bigger than Three Mile Island, because where Constellation leads, other power plant operators may follow. According to the US Energy Information Administration, there are currently 54 nuclear power plants operating in the US, operating with 94 reactors. In addition, the EIA says 22 reactors are “in various stages of decommissioning” and could theoretically be reactivated.

Although only one new reactor is under construction in the US, several small nuclear power companies with names such as NuScale Power Corporation and Nanonuclear energyworking to get approval for new smaller-scale nuclear power plant projects.

Is Cameco stock a buy?

All this means that there is potential for quite a large increase in nuclear power in the United States and for increased demand for uranium fuel. As the only U.S.-listed uranium miner that is currently both profitable and free cash flow positive (according to data from S&P Global Market Intelligence), Cameco stock is a logical beneficiary of this trend — if it turns into a trend.

However, that doesn’t necessarily make Cameco stock a buy. Valued at 46 times free cash flow and 94 times trailing earnings and paying just a 0.2% dividend, Cameco may be the best deal in uranium mining today.

But it is still too expensive to buy.