That's the prospect President-elect Obama is staring down these days, after inheriting nothing short of a gigantic economic mess created during the Bush administration.

As a result, the president-elect is now proposing a two-year stimulus package in the neighborhood of $1trillion to try to put Humpty-Dumpty back together again. That includes massive infrastructure spending aimed at creating or saving 3 million jobs and about $300 billion in tax cuts for individuals and businesses.

Of course, where we will get all of that dough is another matter entirely and is enough to make a conservative like myself lose sleep at night. But that's another story for another day.

Politics aside though, it's hard to argue that these Obama stimulus investments won't be a positive for the stock markets—at least in the short term. Printing presses or not, money itself does tend to put the capital into capitalism.

Obama Stimulus Investments to Boost Nuclear Power

For investors in this wave of new dollars, that means that infrastructure investments will likely be at the top of their list in 2009. Not surprisingly, that includes nuclear energy stocks, which have seen something of a rebirth in the Bush Administration.

That is because today's growing nuclear revival really began in earnest with the Energy Policy Act of 2005.

In it, the seeds of the industry's rebirth were sown. Specifically, the 2005 act provided the nuclear industry the following:

• $3 billion in research subsidies
• Over $3 billion in construction subsidies for new nuclear power plants
• Nearly $6 billion in operating tax credits
• Over $1 billion in subsidies to decommission old plants
• A 20-year extension of liability caps for accidents at nuclear plants
• Federal loan guarantees for the construction of new power plants

As a result, according to a report by the Nuclear Energy Institute (NEI), 17 companies have filed applications to build as many as 30 new plants in the U.S. Additionally, virtually every one of the 104 existing nuclear plants is expected to renew its original 40-year operating license for another 20 years.

Meanwhile, the nuclear industry as whole had to applaud the selection of Stephen Chu as Energy Secretary. Chu is pro-nuclear and has a deep understanding of all the technical issues around energy.  

In fact, Stephen Chu was one of the recent signatories of a pro nuclear document released in August entitled: A sustainable Energy Future: The Essential Role of Nuclear Energy.

You can read it here.

But to sum it up the paper argued that a coherent long term nuclear power strategy is needed and nuclear power is a major and essential part of solving our energy problems.

Further it proposes the United States should:

• maximize current reactors (plant life extensions, uprate)
• deploy advanced light water reactors
• license Yucca mountain and research advanced fuel management
• pursue aggressive R&D on advanced reactors

Nuclear Infrastructure Stocks and Cap and Trade

Then there is the cap and trade legislation that will likely be back in the picture as early as next spring.  If signed into law, it will put increasingly heavy pressure on the coal industry as Barack Obama has practically promised.

That makes for a likely net gain for all things nuclear as coal comes increasingly under attack.

Here's why.

Without a dramatic increase in the number of nuclear power plants, the revival of cap and trade legislation is nothing but a fantasy. Solar, wind, and geothermal power are certainly important, no doubt, but without a big boost in nuclear power the goals of the bill can never be reached.

In fact, according to an analysis of the plan by the Energy Information Agency (EIA), the U.S. would have to increase its nuclear capacity by 268 gigawatts by 2030 for the cap and trade plan to achieve it stated targets on greenhouse gases.

That would require the building of approximately 200 new nuclear power plants over the next 25 years assuming the average new reactor will produce about 1.3 gigawatts of electric power.

And while that number may seem a bit high to some, the lowest available estimate would require a minimum of 50 new nuclear plants to replace the coal displaced by cap and trade.

One Way to Invest in the Nuclear Infrastructure

That's bullish for companies like Shaw Group Inc. (SGR: NYSE). Along with its Westinghouse partnership, the Louisiana-based engineering and construction company is a major player in the nuclear power industry both here and abroad.

In fact, in a business venture with Shaw Group, China recently completed a 71000 square meter factory to build modules for Westinghouse's AP1000 nuclear reactors in only 11 months. The factory is part of the critical infrastructure that will help China meet its goal of building 100 Westinghouse AP1000 reactors by 2020. That's roughly 10 a year.

But even then that is just the tip of the iceberg. The Shaw Group is also building a similar factory in Louisiana that will be operating by the third quarter of 2009.

As Dan Lipman, senior vice president for nuclear power plants at Westinghouse said recently:

"Westinghouse and our consortium partner Shaw Group are providing four new plants in China, and we have been identified for no less than 14 plants here in the United States."

"Other markets are fast emerging," he added, "It is imperative, therefore, that we move decisively to develop the infrastructure to meet the needs of our fast-growing and essential industry."

Of course, its comments like that and the building of this entire new infrastructure that tells us the nuclear revival is no myth. All of the companies in this space are clearly ramping up for something big.

That's why investors in this group need to stay the course. The payoff here is further down the road.

The need for clean power and the government printing presses will ensure it.

Your bargain-hunting analyst,

Steve Christ
Investment Director
The Wealth Advisory

PS. At the Wealth Advisory we have identified another key part of the nuclear infrastructure that is about to break out in a big way on the potential news of a big government loan guarantee of its own. In fact, this is one stock that could easily double as the news breaks. To learn more about this company, click here. (For the record, the Wealth Advisory's track record now stands at 19 wins and only 2 losses since October 10. That's the day I "called the bottom"... and recommended those trades. Not too shabby for a down market!)