Uranium Energy vs. Cameco: If I Could Only Own 1 Uranium Stock for the Next Decade, I’d Buy This 1

As energy demand grows, the global perspective on nuclear energy has shifted. Worldwide, countries are committing to tripling their nuclear energy capacity by 2050, creating powerful tailwinds over the next decade and beyond for uranium miners like Uranium Energy(NYSEMKT: UEC) and Cameco(NYSE: CCJ).

Both companies benefit from growing uranium demand, but each has a different risk profile that investors should understand. If I had to pick one stock for the next decade, Cameco gets the slight edge. Here’s why.

Cameco and Uranium Energy are efficient uranium miners

Cameco is one of the world’s largest uranium miners and the largest in North America. What sets it apart is its investment in high-grade uranium deposits at McArthur River/Key Lake and Cigar Lake, both in Saskatchewan, Canada. These deposits have low production costs of roughly $21.72 and $23.94 per pound of uranium extracted and processed, respectively, among the lowest for conventional mines worldwide.

In comparison, Uranium Energy relies heavily on in-situ recovery (ISR). Using ISR, Uranium Energy pumps oxygenated water into underground sandstone aquifers to dissolve uranium, then pumps the uranium-rich liquid back to the surface.

Unlike conventional underground or open-pit mines, ISR is less disruptive to the environment and has significantly lower reclamation costs. In the third quarter, Uranium Energy produced 32,195 lbs of concentrate at a total cash cost of $46.69 per pound. Since commissioning, its cumulative average cash cost per pound is around $32.40.

Cameco’s integrated business provides more exposure to the nuclear industry

One stark difference between Cameco and Uranium Energy is their business models and exposure to the nuclear value chain. Cameco is a massive miner, but it also has exposure across nuclear fuel and nuclear equipment sales.

Cameco operates the world’s largest commercial uranium refinery in Ontario. Cameco also owns 49% of Westinghouse Electric, one of the world’s largest nuclear reactor developers, which plans to go public soon. Westinghouse develops the AP1000 reactor, and the U.S. intends to have at least 10 of these under construction by 2030.

Uranium Energy doesn’t have similar investments across the value chain. Instead, it is focused on mining projects in the U.S. and Canada. For Uranium Energy investors, its U.S. footprint could prove a competitive advantage as policymakers move aggressively to reshore the domestic nuclear fuel supply chain and eliminate reliance on adversarial foreign suppliers.

With fully licensed, producing In-Situ Recovery (ISR) processing hubs in Wyoming and South Texas, Uranium Energy is one of the few domestic players that can sell “made in the USA” yellowcake to intermediaries.

Which uranium mining stock is right for you?

Uranium Energy is a higher-risk uranium miner stock because it sells unhedged uranium, giving it greater upside if uranium spot prices continue to climb higher. This, along with its U.S. assets, makes Uranium Energy a stock for aggressive investors who are bullish on uranium’s long-term outlook.

Cameco is a more stable investment. That’s because its long-term contracts lock in revenue for years to come and offer greater stability than Uranium Energy’s if spot market prices fall. Cameco also has exposure across the nuclear value chain, which is why I think it’s the better stock over the next decade for investors seeking exposure to the nuclear industry’s growing tailwinds.

Courtney Carlsen has positions in Cameco. The Motley Fool has positions in and recommends Cameco. The Motley Fool has a disclosure policy.