Why Cameco Corporation Stock Rose 10% in December

Image Source: Cameco Corporation

What Happened?

Cameco Corporation's (NYSE: CCJ) stock price rose a respectable 10% last month. What's more, the gain was actually continuation of a move that began in early November. Indeed, the stock is up by more than 25% since the U.S. presidential election. All in all, the move made up for a great deal of lost ground experienced in 2016 -- it still gave up 13% of its value last year.

So What?

Cameco's decline over the past 12 months speaks to the ongoing price weakness in the uranium market. In fact, during the company's third quarter conference call CEO Tim Gitzel explained that, "Uranium prices are at the lowest levels we've seen in over a decade..." Nothing material has changed on that front and the company didn't report any surprisingly upbeat news in November or December. The stock's advance doesn't appear to be grounded in a fundamental business change or in the uranium market.

Which leaves investors' reaction to the election of Donald Trump in early November as the main driver of Cameco's price advance. The hope is that Trump will shift U.S. energy policy and be more supportive of nuclear power... or at least less supportive of clean energy like wind and solar, which would help nuclear compete.

Now What?

The problem here is that politicians have a history of saying one thing before an election and doing something else after getting elected. That's not to suggest that Trump won't live up to the market's expectations, only that you need to take what any politician says with a grain of salt. And investing solely based on changing political tides is an inherently risky endeavor. Cameco is a well run uranium miner, to be sure. But investors should buy it because they believe in the company, not because there's a new president waiting in the wings of the White House.

10 stocks we like better than Cameco When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Cameco wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of January 4, 2017

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.