Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 16 Oct, 24 | CCJ | Buy | USD 51.71 | USD 56.881 | USD 61.89 | 1 day | 19.7% |
Data Powered by EOD Historical Data (“EODHD”).
Cameco Corporation provides uranium for the generation of electricity. It operates through Uranium, Fuel Services, Westinghouse segments. The Uranium segment is involved in the exploration for, mining, and milling, purchase, and sale of uranium concentrate. The Fuel Services segment engages in the refining, conversion, and fabrication of uranium concentrate, as well as the purchase and sale of conversion services. This segment also produces CANDU reactor fuel bundles and other reactor components. The company offers nuclear fuel processing services. The Westinghouse segment engages in the manufacture of nuclear reactor technology original equipment. This segment provides products and services to commercial utilities and government agencies; and outage and maintenance services, engineering support, instrumentation and controls equipment, plant modification, and components and parts to nuclear reactors. It sells its uranium and fuel services to nuclear utilities in the Americas, Europe, and Asia. Cameco Corporation was incorporated in 1987 and is headquartered in Saskatoon, Canada.
Increased Basic Earnings Per Share: CAD 0.08 in 2QFY24 vs CAD 0.03 in 2QFY23
Increased Gross Profit: CAD 175.32mn in 2QFY24 vs CAD 109.97mn in 2QFY23
Increased Cost of Sales: CAD 423.14mn in 2QFY24 vs CAD 372.01mn in 2QFY23
Negative Net Cash Provided by Investing Activities: CAD -39.83mn in 2QFY24 vs CAD +770.28mn in 2QFY23
Climate Changes, Commodity Price Fluctuations, Inflationary Pressure, Technological Challenges, Regulatory Changes, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 51.71 | 43.436 | 56.881 | 61.89 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Key Financial Indicators: CCJ’s revenue surged by 24.16% YoY to CAD 598.46mn in 2QFY24 vs CAD 481.99mn in 2QFY23. This growth was driven by uranium sales and higher average realized prices in both its uranium and fuel services segments. Adjusted EBITDA increased by 524% YoY and stood at CAD 337mn in 2QFY24 vs CAD 54mn in 2QFY23. Net loss attributable to common stockholders increased by 163.04% YoY to CAD 36.01mn in 2QFY24 vs CAD 13.69mn in 2QFY23.
Growth Catalysts: CCJ’s financial outlook remains optimistic for FY24, with the company expecting consolidated revenue of CAD 2.85bn to CAD 3.0bn. In FY24 CCJ expect share of adjusted EBITDA from equity investment in Westinghouse to be between CAD 445mn and CAD 510mn. CCJ’s production ramp-ups at McArthur River and Cigar Lake position it for growth amid rising uranium demand.
Stock might trade at a slight premuim to its peers considering the revenue growth in 2QFY24, Uranium production increase, rising Uranium prices, and increased adjusted EBITDA in 2QFY24.
Considering the above-mentioned factors, expected revenue growth in FY24, Westinghouse acquisition, anticipated McArthur River & Cigar Lake ramp-up, forecasted production in FY24, upside potential as indicated by the valuation, current trading levels and key risks associated with the business, a 'Buy' recommendation has been given on the stock at the closing market price of USD 51.71, as of 15 October 2024.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Energy Industry: Uranium
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| CCJ Cameco Corp |
0.12 0.23% | 52.56 | 313.44 | 58.14 | 9.03 | 6.00 | 13.84 | 65.71 |
| NATKY JSC National Atomic Company Kazatomprom |
- -% | 36.90 | 14.26 | 15.75 | 0.0096 | 3.56 | 0.0093 | 0.02 |
| SRUUF Sprott Physical Uranium Trust |
-0.419 2.50% | 16.35 | 25.19 | 13.00 | 636.01 | 1.79 | 1968.60 | -177.8571 |
| NXE NexGen Energy Ltd. |
0.04 0.64% | 7.03 | - | - | - | 7.30 | -31.2142 | |
| UEC Uranium Energy Corp |
0.29 4.05% | 7.45 | 674.00 | 158.73 | 23.17 | 3.64 | 22.96 | 523.11 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is neither an indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 15 October 2024. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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