Nuclear is soaring and the sector has the wind at its back. Energy costs are on the rise, nuclear power demand is going to grow, utility stocks are close to recent highs and the economy is no longer expected to slip back into the red. There are several drivers, and several ETFs and major companies that are set to benefit.
Global X Funds reports that one pound of uranium can generate as much energy as 20,000 pounds of coal with a fraction of the carbon footprint. Nuclear power produces about 16% of the world’s electricity, the report said. “Since the bull market for uranium in 2006-2007, many new nuclear plant development projects have been initiated around the world. However, uranium supply is forecast to be in deficit for every year from 2010 onward. RBC Capital Markets estimates that the price of uranium will peak at $80/lb within three years, ” Global X reported.
PowerShares Global Nuclear ETF (NYSE: PKN) is based on the WNA Nuclear Energy Index. It invests in globally traded companies in the nuclear energy industry with representation across reactors, utilities, construction, technology, equipment, service providers and fuels. It has thin volume due to the internationally listed components. Average volume is less than 6,000 shares a day.
Market Vectors Nuclear Energy (NYSE: NLR) is the most active of the three nuclear ETF products with close to 100,000 shares traded per day. It tracks the DAX Global Nuclear Energy index and invests in equity securities of U.S. and foreign companies that have half or more of their revenues directly from the nuclear energy business.
iShares S&P Global Nuclear Energy Index (NASDAQ: NUCL) has very thin volume with only a few thousand shares traded each day. It tracks the S&P Global Nuclear Energy Index with industry weightings all around the globe.
These three traditional nuclear ETS are all hitting 52-week highs.
Cameco Corp. (NYSE: CCJ)’s shares rose after beating lower earnings projections and raising guidance on Monday. The shares hit a new 52-week high of $38.56 before coming back down a bit.
USEC Inc. (NYSE: USU) is the great wild card of nuclear investing. With shares still at $5, its shares could be propelled much higher or lower in the coming days or weeks
A new ETF called Global X Uranium ETF (NYSE: URA) already trades more than 500,000 shares per day. This ETF is designed to track the Solactive Global Uranium Index; as of Nov. 1, 2010 its three largest components were Cameco, Paladin Energy (OTC: PALAF) and Uranium One (OTC: SXRZF).