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The Outlook for Nuclear Stocks

Written By Brian Hicks

Posted September 14, 2010

Doubters say that nuclear power isn’t as “green” as advertised…

They say it wouldn’t be possible without generous gov’t loans and subsidies.

Ignore all that noise.

Nuclear is the best option going forward, even with these drawbacks.

It’s an industry on the verge of a resurgence — and for the first time in decades, new nuclear plants will be built in the United States.

Outside the U.S., nuclear’s future is even brighter. Head of the OECD Nuclear Agency, Luis Echavarri, recently said that as many as 1,000 new plants will be required to meet energy demand by 2050.

Factor in an average plant price of $4 billion, and the size of this market should get a little clearer.

And back in the States, the Obama Administration is essentially “all in” on nuclear.

Faced with pressure from carbon hawks, they’re in a tough spot. They need to cut emissions, but if they don’t do it right, consumers will be crushed by soaring energy costs.

They see nuclear as the best option going forward, and I tend to agree.

Investing options

Uranium is the other silver metal I love, and miners are one of the best ways to capitalize on this nuclear resurgence.

Barron’s says Cameco Corp (CCJ) is cheap. They’re a Canadian miner and refiner of uranium. They’ve had some delays at a new mine, so the stock has been punished, but the long-term prospects look good.

Canada is a great place to start if you’re interested in uranium investments. The country is absolutely stacked with the radioactive stuff. So is Russia, but it’s not the most politically-stable place to invest.

If I’m going to invest in a frigid, commodity-heavy country, I’ll take Canada over Russia any day.


Nuclear-heavy utilities are another way to play the sector. Exelon Corporation (NYSE: EXC) is a $20b firm paying a fat 5% dividend.

EXC is the largest U.S. nuclear operator, with roughly 20% of the market. And unlike most competitors, 92% of this utility’s power is generated by splitting atoms. It’s about as pure a play as you’ll find in this space.

The stock is trading at a very reasonable P/E of 11x. They have a lot of debt, but that’s typical of utilities. They have the cash flow to service it.

All the best,

Adam Sharp
Analyst, Wealth Daily