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The Beginning of a Nuclear Revival

Is Nuclear the New Energy Common Ground?

Written by Nick Hodge
Posted February 2, 2010

Obama's fiscal 2011 budget is seeking a near-200% increase in nuclear funding.

Right now, $18.5 billion has been authorized. He's looking for $54 billion.

According to the Wall Street Journal, the request comes just days "after the U.S. Energy Department announced Friday that it has asked former U.S. Rep. Lee Hamilton, a Democrat, and former National Security Advisor Brent Scowcroft to lead a panel charged with developing a long-term solution for managing the nation's used nuclear fuel and nuclear waste."

It sure sounds like the nuclear industry is about to come out of hibernation.

Stoking the fire, Energy Secretary Steven Chu said this week, "I personally think that nuclear power has a place" because "it is carbon-free."

And Carol Browner, Obama's energy and climate advisor, has been out stumping for nuclear as well: "As the world moves to tackle climate change and diversify our national energy portfolio, nuclear energy will play a vital role."

It's not hard to see the writing on the wall...

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Nuclear: The New Common Ground

Even Congress is talking about nudging nuclear along... with support from both sides of the aisle.

Reuters reports that "Three U.S. senators — Democrat John Kerry, Republican Lindsey Graham and Independent Joe Lieberman — are working on a bipartisan bill to cut U.S. greenhouse gas emissions."

To gain republican support, the bill includes incentives and loan guarantees that would expand the use of nuclear power.

Lieberman's spokesman said the loan guarantees "will help engage supporters of nuclear power from both sides of the aisle."

Kerry said it's "an important sign of the White House's commitment to addressing climate change and advancing clean energy goals."

Even the perpetually displeased Lisa Murkowski had good things to say, exclaiming that increased incentives were "a good first step toward expanding our use of clean nuclear energy."

Obviously, nuclear energy is quickly emerging as the common ground for a sharply divided congress. It's time to find some investment opportunities.

Profiting from a Nuclear Revival

The nuclear industry has been waiting for a loan guarantee announcement for some time now. Last year, the Department of Energy whittled the potential recipients down to a short list.

Here are the four companies likely to receive them:

  • Southern Co. (NYSE: CO)

  • Constellation Energy (NYSE: CEG)

  • NRG Energy (NYSE: NRG)

  • SCANA Corp. (NYSE: SCG)

If you're looking for a safe way to play nuclear expansion, these companies are probably a good place to start.

Big utilities with nuclear assets — especially if they're receiving gov't incentives — will benefit as a new generation of plants are built.

According to former EPA head Christine Whitman, "If we're going to stay at 20 percent total capacity, which is where nuclear is today, by 2030, then we need between 25 and 30 nuke reactors."

So buying and holding Cameco (NYSE: CCJ), which has exposure to uranium fuel supplies, is probably also a good bet.

For riskier fuel-side bets, take a look at USEC Inc. (NYSE: USU), Uranerz Energy (AMEX: URZ), or Denison Mines (AMEX: DNN).

But the most lucrative nuclear profits may come from a concept that hardly anyone has covered: nuclear fuel additives.

You see, major universities have been studying the impact various metals have on the performance of uranium fuel. And they've found that bonding certain oxides to uranium pellets can greatly improve the operation of nuclear plants.

It allows more energy to be extracted from the nuclear fuel, which will improve the margins of plant operators. And it vastly improves thermal conductivity, improving safety by keeping the core temperature of the uranium cooler.

In anticipation of a coming nuclear bull market, I've prepared a report on the one company that has exclusive rights to the oxide process. They also own enough reserves of the rare metal required to make the oxide to power the nuclear industry for 100 years.

Testing is almost complete and the company is already in multi-billion supply talks with major nuclear fuel companies. You'll want to know about this company before the fuel is officially approved for use.

Call it like you see it,

Nick Hodge

Nick

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