Better Energy Stock: ExxonMobil vs. Cameco

The oil and gas giant has extensive assets across key regions like the Permian Basin and Guyana. While it’s known for its oil business, there is a real long-term opportunity in natural gas. That’s because natural gas is a growing source of fuel for electricity generation, heating, industrial processes, and fertilizer production. Due to its abundance and cleaner-burning properties, it plays a crucial role in modern energy production and can serve as a “bridge” fuel as other renewable energy sources are developed.

In Guyana, gas is produced alongside oil and serves as a strategic asset for power generation and LNG development over time. This “associated gas” has historically been a byproduct of oil production, but it could become a more valuable product over time. Exxon also has a global liquefied natural gas (LNG) portfolio, including operations in Papua New Guinea and equity stakes in Qatar’s major LNG expansion projects. It aims to double its global LNG supply portfolio by 2030 (compared to 2020).

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One of the most significant drawbacks for Cameco and others in the nuclear space is that the stocks have gotten quite expensive over the past couple of years. This reflects the growing long-term opportunities for these companies, but also indicates that investor enthusiasm has driven valuations to sky-high levels.

For example, the 20 analysts covering Cameco estimate it could earn $1.52 in earnings per share (on a non-GAAP basis) in 2026, giving the stock a valuation of nearly 65 times those projected earnings. While Cameco could see strong growth, its expensive valuation could make it vulnerable to significant price swings.

In comparison, ExxonMobil is priced at 17 times its projected 2026 earnings, making it a more compelling option for value investors. Not only that, but analysts think it can grow earnings by 21% in 2027 and nearly 12% in 2028.

Cameco is a solid stock to play the nuclear energy revolution, but it is expensive. The premium reflects strong growth expectations, but also increases downside risk if growth fails to materialize and those expectations aren’t met. This makes Cameco best suited for growth investors who are optimistic about the long-term prospects of the nuclear industry.

ExxonMobil is a relatively inexpensive stock with a strong balance sheet and a history of dividend increases, offering an attractive opportunity in the natural gas and LNG space. For value-focused investors seeking a more attractive price, ExxonMobil is a better option.

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

Better Energy Stock: ExxonMobil vs. Cameco was originally published by The Motley Fool