Why Cameco Stock Rose 22% in January 2023: Should You Buy Now?

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Shares Cameco (TSX:CCO) rose about 22% in January alone, a very good start to the year for the uranium company. After a year of volatility among retail traders, investors now believe it is safe to buy back Cameco shares before selling off.

But there’s a lot to consider here. While the investment may be strong in the next few years, the long-term investment may not be so sure. So, let’s take a look at why Cameco stock is climbing and whether investors should continue to pick up the stock.

Why Investors Buy Cameco Stock

There are a few reasons why investors should consider Cameco stock on the TSX today. Of course, there’s a more obvious reason: It’s the world’s largest producer of publicly traded uranium. The world needs uranium, not just in the future Right now. About 20% of the US already relies on nuclear power. Therefore, it is a real need that the world demands.

As countries around the world build more nuclear reactors, that demand is climbing even higher. The aftermath of the Fukushima disaster had deadly consequences. Company shares fell. But over a decade, demand Clean energy There is a high demand. Hence, Cameco stock should continue to do so over the next few years.

But how long can it last?

Uranium Forever?

Here’s the problem: Uranium is not an infinite resource. Ultimately, humans must come together renewable Energy Process – not just a clean one. This is why the price of uranium continues to rise. Cameco stock may be firing on all cylinders, but it will eventually have to dip into its reserves. Because it is a finite resource, we cannot mine enough to satisfy the world’s needs.

Because of this, nuclear power is a bridging power. This will help bridge the gap between the oil and gas power of the past and the renewable energy of the future. So while Cameco stock may be doing well for now, especially with more investment announcements in nuclear power, it won’t be doing well forever.

Does it matter if you invest for the next few years? We need to identify whether it is a worthwhile purchase or not.

Expensive play

Cameco stock is expensive any way you look at it on the TSX today. Shares are up 22% in the past month and 54% in the past year. Yet at that point, it goes around like a yo-yo. In fact, its ticker looks like the world’s most dangerous roller coaster.

It currently trades at 128 times earnings at the time of writing, and the company doesn’t have much in terms of dividends. Why is it when money is needed to meet demand? There is one more area that doesn’t really matter if it’s expensive, and that’s through investment by financial institutions.

These are With about 63% of Cameco shares owned by financial institutions, there are supporters to raise the stock. They want to generate income in the short term, but can easily put it somewhere else in the future. Therefore, investors should pay close attention and perhaps steer clear of Cameco stock — at least until it returns to value territory.

Position Why Cameco Shares Soared 22% in January 2023: Should You Buy Now? appeared first Motley Fool Canada.

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Further reading

• 4 Value Stocks for Best Income in 2023
• 4 Best Green Energy Stocks for 2023
• 4 Undervalued Canadian Stocks to Buy in January 2023

Fool Contributor Amy Legate-Wolf has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. A motley fool Disclosure Policy.

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