Check Out This Soaring Stock, up 469% in 5 Years, With More Gains Likely to Come

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Canadian investors are starting to become more confident about the market, which means they might be looking for some promising growth stocks. With that in mind, it can be tempting to look at the stocks that have soared over the last few months. But I would urge you to look for companies that are steadily rising, and Cameco (TSX:CCO) has been one of them.

Shares of Cameco stock have risen 469% in the last five years alone. Despite some disruptions in the last few decades, the company is poised for even more growth in the future. So, let’s get into what’s been going on and what investors can look forward to.

The bigger factors

Before we get into Cameco stock specifically, it’s important to discuss the factors that are influencing the growth of the share price beyond the company’s performance. For instance, Cameco is a leading uranium producer, and the uranium market has witnessed a recovery in recent years. Factors such as increasing demand for nuclear energy, particularly in emerging economies like China and India, and supply constraints due to production cuts and mine closures have contributed to the uptick in uranium prices.

Furthermore, the uranium market has experienced supply disruptions due to mine closures, production cuts, and delays in new project developments. These disruptions have tightened the supply-demand dynamics, leading to higher uranium prices, which directly benefit companies like Cameco.

Then there’s the change from investors in general. Investor sentiment towards nuclear energy and uranium mining companies may have improved over the last few years.

As concerns about climate change and the need for clean energy solutions grow, nuclear power is being reconsidered as a viable option due to its low carbon footprint. This positive sentiment towards nuclear energy can translate into increased investment in uranium producers like Cameco.

The company’s factors

First, there’s the overall rise in uranium prices, with Cameco stock being a huge beneficiary. Cameco’s business revolves around uranium mining, refining, and sales. As the primary revenue generator, uranium price hikes directly translate to increased profits. In fact, 2023 saw a significant rise in uranium prices, nearly doubling Cameco’s earnings.

Yet the company doesn’t just depend on uranium prices. They secure long-term contracts with customers at a fixed price or a price linked to an index, offering stability and potentially benefiting from rising uranium prices in the long run.

Furthermore, in November 2023, Westinghouse was acquired by a consortium led by Brookfield Asset Management and Cameco stock. This partnership aims to leverage expertise in clean energy and nuclear technology. Brookfield brings global leadership in carbon-free energy, while Cameco offers experience in the nuclear fuel cycle.

The combined resources and expertise could propel Westinghouse’s growth within the clean energy sector. In fact, earnings already showed this was underway.

Bottom line

There are many reasons for Cameco stock’s rising share price. The thing is, supply and demand for uranium remain constant. Geopolitical events have made the uranium supply even more strained. The company continues to provide long-term contracts, with even more room to grow.Â

As the world continues to shift towards clean energy, and with more contracts and partnerships from Cameco stock, this 469% share growth could just be the beginning.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management and Cameco. The Motley Fool has a disclosure policy.