It looks like there is a nuclear power renaissance taking place in the United States. That's a good thing for Cameco (CCJ 1.29%), which produces nuclear fuel and offers other nuclear-related services. But before you buy this stock you need to understand a little bit more about its business. Here's what you need to know to get started.

What does Cameco do?

At its core, Cameco is a uranium miner. Uranium is the fuel for nuclear power plants; Cameco mines for uranium and processes it so it can be used. The company also bought Westinghouse with partner Brookfield Asset Management (NYSE: BAM) after Westinghouse went bankrupt, giving Cameco exposure to the construction and maintenance of nuclear facilities.

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The key takeaway here is that Cameco is all in on the nuclear power sector. That is both good and bad. While Westinghouse has a strong underlying business providing services and replacement parts to nuclear power plants, the real driving force at Cameco remains its uranium mining operations. That is a problem, because uranium is a commodity. Over the past few months, the price of uranium has been falling after a multiyear price advance.

The moves in uranium have translated into Cameco's stock price. Over the past three years, Cameco's shares are up over 90%, which is a pretty good showing. But over the past three months, the stock has lost more than a quarter of its value. That's the type of swing that investors have to accept when they buy a commodity-driven company.

CCJ data by YCharts

Cameco as a long-term play on nuclear power

That said, the world is in the midst of an energy transition. Dirtier carbon-based energy sources are being replaced with ones that are cleaner or that don't emit carbon dioxide at all. There's only one problem with carbon-free power -- much of it is intermittent in nature. When the sun isn't shining, solar power doesn't produce energy. When the wind isn't blowing, wind turbines don't turn. There remains a need for reliable base-load power that is always on. Nuclear power can provide that, and it doesn't emit carbon dioxide.

This is why the United States, and more broadly the world, appears to be embracing nuclear power again. Helping this along are new reactor designs that are expected to be safer to operate and less costly to build than older designs. This includes large-scale power plants like the two Westinghouse-designed reactors brought online by The Southern Company (NYSE: SO). And it also includes small modular reactors, like the type being designed by NuScale Power (NYSE: SMR).

There are a few problems here, though. The Southern Company plants were long delayed and way over budget, so large nuclear power plants aren't exactly an easy sell right now. Westinghouse believes it has learned valuable lessons and redeveloped the needed supply chain to build additional units in a more cost-effective and time-conscious manner. But that won't be proven true until more new units get approved and built. Small modular reactors, meanwhile, are a great idea, but have yet to be approved for wide-scale use. In other words, that's not quite a realizable opportunity, either.

Wall Street likes to think ahead, so some of the price advance in uranium and for Cameco's stock probably involved a glass-half-full view of the world. If you believe the future is bright for nuclear power, you might view Cameco's stock pullback as an opportunity. But if you take a glass-half-empty view of things, the pullback could be seen as just the beginning of a trend in an industry with a lot of opportunity but with few clear wins just yet.

Is Cameco a buy now?

So, should investors interested in investing in nuclear power buy Cameco? If you are risk averse, the answer is probably no. You would be better off buying a utility, perhaps Southern, that owns nuclear power plants. If you are a risk taker, however, the equation is a bit different. Assuming you have a constructive view of nuclear power and are willing to make a very long-term commitment, Cameco could be a good way to gain direct exposure to the sector. Just go in knowing that volatility is likely to be the norm.