Picture supply: Getty Photographs.
Canadian mining shares are fairly wealthy with worth as of late, whilst the costs of the commodities they produce have heated up in recent times. Undoubtedly, mining performs are typically extra leveraged methods to wager on the long-term energy of a specific commodity.
Whether or not we’re speaking about gold, silver, different metals, oil, or agricultural commodities, there’s no scarcity of intriguing choices right here on the TSX Index. On this piece, we’ll slim in on one specific Canadian mining inventory that I feel stands out as extremely distinctive, not simply on the Canadian inventory market however on the worldwide stage.
Certainly, mining commodities could be a relatively dangerous enterprise, particularly given it’s oh-so-hard to inform the place the value of a commodity is headed over the close to and medium time period. Certain, you may take note of some big-name commodities pundit and their forecast for the place costs could possibly be headed subsequent.
However on the finish of the day, there are simply too many query marks which will drag or propel costs over the close to time period. As an alternative of making an attempt to commerce commodities or their miners, it could make sense to isolate a number of the best-run miners on the earth and purchase them whereas they’re buying and selling at modest multiples for the long term.
Certainly, commodity miners might be risky, however they’re extremely portfolio diversifiers. With out additional ado, let’s get into the highest Canadian mining inventory that’s on prime of my radar going into June 2024.
Cameco inventory: A top-tier miner to purchase on the dip
Enter Cameco (TSX:CCO), a uranium miner with a $29.1 billion market cap that stands to learn from a nuclear energy renaissance of kinds. Certainly, Cameco isn’t the one uranium miner on the planet, but it surely’s actually probably the greatest and most intriguing from a long-term perspective.
The inventory itself has been red-hot for the reason that begin of 2023. Over the previous yr, shares have shot up greater than 80%. Although 2024 introduced forth a bit extra volatility, the inventory has discovered a strategy to march greater on the again of what could possibly be a long-term bull run within the value of uranium.
For the primary quarter (Q1), Cameco reported a $7 million loss. With shares now down simply over 6% from its all-time excessive, I’d look carefully at nibbling on weak spot. Sure, the inventory appears fairly costly (124 occasions trailing value to earnings) proper right here, but it surely’s as a result of the uranium market fundamentals haven’t appeared this spectacular in a very long time. In fact, uranium costs have pulled again fairly a bit from their highs.
Uranium costs may bounce again
Although solely time will inform if $100 per pound will likely be exceeded once more, some analysts on the market assume that the $115 mark could possibly be put to the check, maybe as quickly as 2025. Take such projections with a fantastic grain of salt, however I feel nuclear tailwinds could possibly be sticking round for a few years, if not everything of the following decade.
At this tempo, I feel there’s no stopping the brand new nuclear energy reactors poised to return on-line over the following six-plus years, particularly as China appears to be like to the power supply to curb greenhouse gasoline emissions over the lengthy haul.
