Canadian mining stocks are pretty rich with value these days, even as the prices of the commodities they produce have heated up in recent years. Undoubtedly, mining plays tend to be more leveraged ways to bet on the long-term strength of a particular commodity.
Whether we’re talking about gold, silver, other metals, oil, or agricultural commodities, there’s no shortage of intriguing options here on the TSX Index. In this piece, we’ll narrow in on one particular Canadian mining stock that I think stands out as incredibly unique, not just on the Canadian stock market but on the global stage.
Indeed, mining commodities can be a rather risky business, especially given it’s oh-so-hard to tell where the price of a commodity is headed over the near and medium term. Sure, you can pay attention to some big-name commodities pundit and their forecast for where prices could be headed next.
But at the end of the day, there are just too many question marks that may drag or propel prices over the near term. Instead of trying to trade commodities or their miners, it may make sense to isolate some of the best-run miners in the world and buy them while they’re trading at modest multiples for the long run.
Indeed, commodity miners can be volatile, but they’re incredibly portfolio diversifiers. Without further ado, let’s get into the top Canadian mining stock that’s on top of my radar going into June 2024.
Cameco stock: A top-tier miner to buy on the dip
Enter Cameco (TSX:CCO), a uranium miner with a $29.1 billion market cap that stands to benefit from a nuclear power renaissance of sorts. Indeed, Cameco isn’t the only uranium miner on the planet, but it’s certainly one of the best and most intriguing from a long-term perspective.
The stock itself has been red-hot since the start of 2023. Over the past year, shares have shot up more than 80%. Though 2024 brought forth a bit more volatility, the stock has found a way to march higher on the back of what could be a long-term bull run in the price of uranium.
For the first quarter (Q1), Cameco reported a $7 million loss. With shares now down just over 6% from its all-time high, I’d look closely at nibbling on weakness. Yes, the stock seems quite expensive (124 times trailing price to earnings) right here, but it’s because the uranium market fundamentals have not looked this impressive in a long time. Of course, uranium prices have pulled back quite a bit from their highs.
Uranium prices could bounce back
Though only time will tell if $100 per pound will be exceeded again, some analysts out there think that the $115 mark could be put to the test, perhaps as soon as 2025. Take such projections with a fine grain of salt, but I think nuclear tailwinds could be sticking around for many years, if not the entirety of the next decade.
At this pace, I think there’s no stopping the new nuclear power reactors poised to come online over the next six-plus years, especially as China looks to the energy source to curb greenhouse gas emissions over the long haul.
