While the world is working to transition away from Russian oil, the European Union (EU) just took an interesting step by voting for a policy proposed by the European Commission. Known as taxonomy, it decrees that some gas and nuclear projects can be considered green. This grants them access to more affordable loans and state subsidiary programs.
As the New York Times reports, “The policy, known as the ‘taxonomy,’ is meant to stop ‘greenwashing,’ the pervasive practice of mislabeling energy projects as environmentally friendly.” It would also give the EU more room to replace the energy sources it received from Russia prior to the latter’s invasion of Ukraine.
The outlet also notes the passing of taxonomy could easily become a global benchmark. It is true that if it proves successful, other countries are likely to follow this example. But even the most recent development with the EU is likely to prove a positive catalyst for nuclear energy stocks across the globe.
That means the time to start watching this sector is now. Let’s take a look at the nuclear energy stocks most likely to benefit from this decision.
|LEU||Centrus Energy Corp||$26;48|
|ECIFY||Electricite de France||$1.76|
Centrus Energy (LEU)
Maryland-based Centrus Energy (NYSEAMERICAN:LEU) has a unique edge in the oil and gas sector: it supplies the fuel that is needed to power nuclear plants.
It began as the United States Enrichment Corporation in 1992, which was created to produce enriched uranium for the U.S. Department of Energy. After going through several changes, it was ultimately restructured as Centrus Energy in 2014.The new company still serves as the parent of the Enrichment Corporation, though. Its list of nuclear fuel supply contracts is vast and spans beyond 2026.
While some have questioned if taxonomy is actually a green policy, Centrus has won praise for its work with HALEU. MarketBeat reports that “it’s efficient and cleaner than previous nuclear fuels, giving the company a competitive advantage.” This will make it an easy pick for EU firms seeking to award nuclear energy contracts.
NuScale Power (SMR)
NuScale Power’s (NYSE:SMR) clever trading symbol is no doubt a nod to a product it makes: small modular reactors (SMRs). These nuclear reactors are able to generate a significant amount of low-carbon electricity.
The company’s mission is to “improve the quality of life for humankind by continuously improving nuclear power.” NuScale seems to be well on its way to accomplishing this feat. Like Centrus, it is focused on making nuclear energy cleaner and safer, viewing it as an important means of powering the future.
When he named NuScale as a top energy stock to buy for June 2022, InvestorPlace contributor Josh Enomoto noted “nuclear power features the highest capacity factor out of all other energy sources at 92.5%.” This is why he believes SMR stock has significant upside. Now that the EU has implemented taxonomy, it has even more. NuScale already has projects in multiple EU nations including Poland and Romania.
Electricite de France (ECIFY)
Until recently, this penny stock would have seemed like a highly speculative investment. But Europe’s energy crisis is proving to be a significant boon for Electricite de France (OTCMKTS:ECIFY). France’s government has announced that it plans to fully nationalize the debt-ridden company to help its country stay powered through turbulent times. Bloomberg reports “the state will raise its stake in EDF to 100% from 84% currently. No decision has been made at this stage on the modalities of the operation.”
Therefore, it’s no surprise ECIFY shares shot up more than 10% today following the news. This former industry giant has been trending downward for years as attitudes toward nuclear power have become negative. But with the French government stepping in, the company may finally see the growth catalyst it needs to start rising again.
With the passing of taxonomy, the time has never been better for an EU-based company to undertake nuclear power projects. Trading at less than $2 per share, ECIFY will likely be a tempting play for investors.
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On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.