Yahoo Finance Cameco stock surges as uranium miner touts 'lots of good tailwinds'
Shares of Canadian uranium miner Cameco (CCO.TO)(CCJ) saw a double-digit surge on Wednesday as the company touted "lots of good tailwinds" for the radioactive metal, and hiked its annual dividend.
Saskatchewan-based Cameco says it will pay investors $0.12 per common share annually beginning in December, up from $0.08. The announcement comes as the company's fourth-quarter financial results show a decline in profit and revenue compared to a year ago.
However, president and chief executive officer Tim Gitzel notes today's market for uranium is "more constructive than we've seen in a very long time."
Speaking with analysts on a post-earnings conference call, he says uranium spot prices have increased nearly 40 per cent year-over-year, and global demand for nuclear fuel is rising ahead of a "looming supply gap."
"It's easy to conclude that the demand outlook is durable and very bright. However, the uranium supply-side story paints a much different picture," Gitzel said on the call. "The benefits of nuclear energy have come clearly into focus with a durability that we believe has not previously been seen."
Gitzel highlights a proposal by the European Union to allow nuclear power to qualify as investment in sustainable energy under its green labelling system, which he says could spur investment in uranium assets from the growing number of ESG-focused funds. The Netherlands, the Czech Republic, Poland, Estonia, Slovenia and Serbia have also expressed interest in adding new nuclear capacity, he says. Gitzel adds that support for nuclear energy is the highest in decades in the United States.
Meanwhile, supply has suffered for years of weak investment post-Fukushima, and more recently, geopolitical tension in Eastern Europe and disruptions related to the COVID-19 pandemic.
"We see fuel buyers wanting to lock in prices today," chief financial officer Grant Isaac said on Wednesday's call. "They know the price is going to go up."
Toronto-listed Cameco shares climbed 12.28 per cent to $28.34 at 11:54 a.m. ET. The stock has fallen about eight per cent year to date, after a strong performance in 2021, reflecting a recent pull-back in clean energy investments. The $1.1 billion Global X Uranium ETF (URA), which counts Cameco among its core holdings, has also fallen about eight per cent this year. The broader iShares Global Clean Energy ETF (ICLN) has dropped nearly 14 per cent in that time.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
Download the Yahoo Finance app, available for Apple and Android.
