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Uranium Investment Report: Cameco ( CCJ- NYSE )

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Here Is Why Billionaire George Soros Bought $45 Million Worth of this Stock

According to recent SEC filings, the billionaire investor beefed up his stake in the company last quarter. His total investment now totals nearly 2.6 million shares, valued at US $42 million.

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What could he see in Cameco?

Here’s the thing: uranium prices are so low right now, miners cannot recoup their cost of capital. Today, spot rates are hovering around US $38 per pound, well below the average $75 per pound price the industry needs to breakeven.

Needless to say, that’s a problem. Miners are losing nearly US $40 on every pound of uranium they haul out of the ground. You don’t need a Ph.D. in finance to figure out that this is a great way to go out of business.

And that’s exactly why the current situation can’t last. Small miners are going bust. Large outfits are scaling back operations. Eventually, prices must rise to meet the cost of production — that’s more than 100% over today’s levels.

As you know, when Japan was hit by a massive tsunami on March 11, 2011, it forced the shutdown of its Fukushima nuclear plant.

The government announced that it would stop building more nuclear plants in the future.Consequently, uranium prices plummeted and uranium stocks fell in sympathy.

Now, years later, Japan has changed its energy policy by reversing plans to gradually mothball its nuclear power plants. Nuclear power is back, starting in Japan.

Uranium demand is picking up, although the price remains down under $30 a pound. But the stage is set for an explosive rally.

Thanks to rapid growth in emerging markets, electricity demand is ramping up, and so is demand for nuclear energy.

Today, there are 70 nuclear reactors under construction worldwide, with 160 planned and 315 proposed.

Altogether, uranium supplies need to increase by about 90 million pounds annually by 2020 to meet demand. But at current low spot prices, the industry can only supply half of that total.

How to profit? Billionaire investor George Soros enriched his portfolio with Cameco (NYSE: CCJ), the world’s largest producer of uranium. In fact, he bought $45 million worth. Why?

Cameco has the lowest costs of production and strongest balance sheet in the industry.

Revenues hit $1.98 billion in December 2015, and now that its Cigar Lake facility in northern Saskatchewan is coming online, Cameco is expected to increase production to 18 million pounds by 2018.

The company also believes annual uranium consumption will jump from today’s range of roughly 160 million pounds to 220 million by 2025, and it’s looking to increase production and develop new mines in Australia and Canada. If uranium prices reverse course and rally from current levels,

Cameco shares could skyrocket. Traditionally, now is an excellent window of opportunity. Keep in mind that Cameco tends to do well in late April into May and the summer (75% of the time it makes money for investors).