Why Cameco Stock Rocketed Nearly 11% Higher Today

Key Points

• The nuclear fuel specialist got a boost from a policy statement from a cabinet secretary.

• The Trump administration wants to boost the national strategic stockpile of uranium.

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Buffeted by a pair of tailwinds, Cameco (NYSE: CCJ) stock surged in trading on Monday. Shares of the uranium supplier rose by nearly 11% in value, largely on news that the U.S. aims to increase the national strategic stockpile of the element used as fuel for nuclear power plants. A separate news item about a deal the company inked with a European peer also added to the bullishness. The stock's rise was far steeper than the 0.5% increase of the S&P 500 index.

Strategic goals

At the annual conference of the International Atomic Energy Agency (IAEA) in Vienna, Austria, U.S. Energy Secretary Chris Wright made those remarks about the uranium stockpile. He indicated two key goals in this regard -- to boost confidence in the nuclear industry, which is a cornerstone of the administration's energy policy, and to reduce dependence on supplies from Russia (that country supplies roughly 25% of the enriched uranium needed in the U.S.).

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In an interview with Bloomberg, Wright said, "We hope to see rapid growth in uranium consumption in the U.S. from both large reactors and small modular reactors."

He added that "The size of that right buffer would grow with time. We need a lot of domestic uranium and enrichment capacity."

A Central European deal

Separately, Cameco announced after market close Friday that it finalized a long-term uranium supply deal with Slovakia's Slovenské elektrárne (Slovak Electricity, or SE). The fuel will be used in the utility company's nuclear power plants in the small central European country, in an arrangement that lasts through 2036.

Cameco said the terms of the deal are confidential; it did not provide any financial details.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Cameco. The Motley Fool has a disclosure policy.