Cameco is Tuesday's IBD Stock Of The Day, as the uranium exploration and mining outfit reported better-than-expected third-quarter earnings and increased its full-year revenue outlook even as Q3 sales missed projections. CCJ shares surged Tuesday.
The Canada-based company reported early Tuesday that third-quarter EPS ballooned more than 1,000% to 23 cents, easily topping Wall Street expectations. Cameco revenue increased 44% to $416 million, but came in below analysts' prediction of $486 million.
The company added that in the first nine months of the year it delivered 22.2 million pounds of uranium at an average realized price 13% higher than in the same period last year. Meanwhile, sales in Cameco's fuel services segment grew 7% in the first nine months of 2023 with an average realized price 9% higher than 2022.
Chief Executive Tim Gitzel said in the earnings release Tuesday that Cameco's Q3 earnings were driven by "positive momentum we are experiencing in the nuclear energy industry."
Gitzel said there is growing support for nuclear power while geopolitical uncertainty surrounding Russia's invasion of Ukraine and the recent coup in Niger has "intensified supply concerns as future uranium supply and downstream processing is needed to balance the market."
The Cameco CEO added that there are production challenges and that the market does not have the "inventory or secondary supplies to absorb market shocks."
"We are seeing durable, full-cycle demand growth across the nuclear energy industry," Gitzel added. "These factors lead us to believe that we are experiencing the industry's best ever market fundamentals."
Cameco now predicts 2023 consolidated revenue of $2.43 billion-$2.58 billion vs. its previous forecast of $2.38 billion-$2.53 billion.
Cameco Stock
CCJ shares jumped 7.9% to 40.85 in Tuesday market action in strong volume following the company's earnings beat. In October, Cameco stock is up 3%, on pace Tuesday for a seventh straight monthly gain. CCJ shares are up more than 80% in 2023.
Cameco stock is gapping up on earnings in a short consolidation, which could become a valid base after this week. Investors could already use 42.16 as a buy point.
For aggressive investors in the current market environment, CCJ shares could be viewed as actionable Tuesday above the 50-day moving line and its short-term high of 39.77, which it hit last Wednesday.
The relative strength line hit a nine-year high Tuesday, according to MarketSmith analysis, a bullish sign.
CCJ stock joined SwingTrader on Tuesday.
However, there is elevated risk in the current market correction.
Cameco stock has a 74 Composite Rating out of a best-possible 99. CCJ shares have a 96 Relative Strength Rating and a 29 EPS Rating. The EPS rating should start to improve.
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