This summer’s Oppenheimer movie reinvigorated the public imagination for nuclear energy opportunity, but the energy industry has been quietly moving toward it for years now.
It closely linked the resurgence of nuclear to global efforts to combat climate change and a strategic need for Europe to reduce its dependence on Russian oil and gas imports. This shift in energy strategy is reshaping the landscape for nuclear power as a key component in the transition towards more sustainable energy sources.
In the United States, the Advance Act promotes the development of new nuclear technologies domestically and internationally. This includes transforming conventional energy sites and providing regulatory support for advanced nuclear technologies.
The international trend towards nuclear power shows a significant shift in energy policies, reflecting the growing recognition of nuclear’s role in achieving a more sustainable and secure energy future.
While nuclear opportunities are clear, what’s less clear is which nuclear stocks stand to gain the most from shifting winds.
VanEck Uranium+Nuclear Energy ETF (NLR)
VanEck Uranium+Nuclear Energy ETF (NYSEARCA:NLR) is on the pricier side of ETFs, with a 0.61% expense ratio ($61 annually on a $10,000 investment).
But, if you’re bullish on nuclear but don’t want to risk betting the farm on single stocks, NLR is your best opportunity to capture sector-wide upside. Better yet, NLR’s uranium mining inclusion means you aren’t completely concentrated in nuclear energy stocks alone.
Since January, the ETF returned a massive 34%, more than doubling the S&P 500’s performance over the same period, which more than offsets the expense ratio. The ETF also offers a small dividend, currently 1.51% over the past twelve months, to help investors with dollar-cost averaging strategies.
Best yet, the ETF offers exposure to many of the same stocks we’re going to cover now. Critically, though, it holds many foreign stocks directly. This means you can increase global diversification without navigating foreign exchanges or trying to determine the difference between ADRs and F-shares.
Constellation Energy (CEG)
Besides nuclear opportunities, Constellation boasts over 23,000 megawatts of clean and green energy across solar, wind, and hydro plants. That capacity lets this top nuclear stock produce over 10% of the US’ current energy needs.
As nuclear adoption reaches critical mass, Constellation is one of the few energy producers ready to capture the market at scale.
Constellation realizes the joint financial and sustainability opportunity that nuclear energy stocks offer. This week, management, alongside other climate leaders, signed an industry-wide pledge to triple nuclear energy output by 2050.
Constellation should realize the advantages nuclear offers compared to other clean energy, considering options like solar and wind are more prone to weather risk and infrastructure damage than nuclear.
Though CEG’s 27x price/earnings ratio indicates overvaluation, the nuclear stock is as much a growth play as it is a standard utility stock.
The plant is the last in California and serves as a symbol of sustainable energy activists butting heads against the clean energy opportunities presented by nuclear.
PG&E is keeping the nuclear light aloft in California and stands to gain substantially if (or when) local legislators begin pivoting toward the clean energy option.
PG&E faces other risks, though, which, combined with regulatory uncertainty, could make this stock lower on the list of nuclear energy stocks to buy. Critically, as with all utilities, PG&E margins are razor thin as high business costs butt up against rate caps.
As they rely on legislators to authorize nuclear, PG&E needs regulatory agencies to allow rate cap increases to improve profitability. California is typically less amenable to that course of action, presenting a substantial risk to this nuclear energy stock.
Public Service Enterprise Group (PEG)
Notably, for value enthusiasts, the company has paid a dividend yearly since 1907. The company consistently raises its dividend as earnings grow. True to form, PEG’s dividend climbed 6% over the past few years. Management’s commitment to shareholder value is evident as the company’s bottom-line figures improve, showing bullishness.
Beyond its nuclear offerings, PEG also lets energy investors diversify with legacy fuels. The company is working to expand its natural gas infrastructure with a $900 million investment.
This means PEG has one foot in the future – managing multiple nuclear plants – while remaining practical about short-term energy needs. This makes PEG the perfect mix to capture long-term nuclear upside and avoid short-term turbulence as regulatory bodies determine scope and scale of nuclear safety requirements.
NexGen Energy (NXE)
NexGen Energy (NYSE:NXE) stands out as a potentially high-reward nuclear energy. The penny stock primarily focuses on uranium, a resource increasingly viewed as a cornerstone of sustainable energy.
While investing in uranium and NXE is more speculative than typical utilities, NexGen Energy’s strategic position could mean big things ahead if it can navigate present financial challenges.
Currently unprofitable and with limited immediate growth prospects, NXE receives positive forecasts from industry analysts. Some have set their price targets as high as $8.39 per share, indicating a potential increase of over 35% from its current price.
Focused on energy exploration, NXE’s value could surge as the global emphasis on sustainability intensifies. There’s a growing recognition that electric and lithium battery solutions may have more environmental impact than initially believed, which means uranium will become a hot commodity as global winds shift to emphasize nuclear energy.
Energy Fuels (UUUU)
Energy Fuels (NYSEAMERICAN:UUUU) is another uranium mining stock to capture the nuclear industry’s supply side.
In addition to uranium, the company also produces vanadium, a metal known for its strength-enhancing properties in steel, making it valuable for applications like armor plating, axles, tools, piston rods, and crankshafts.
This helps investors diversify their mining assets as they wait for nuclear energy to rebound.
Considering uranium’s speculative nature, Energy Fuels is notable for its remarkably high net profit margin of 271%, positioning it as one of the top nuclear energy stocks to consider.
The company’s financial health is further underscored by its lack of debt and impressive returns, with its per-share price climbing over 20% since January. This shows a strong capability in financial management, yielding robust returns for investors and hitting sustainable growth targets in a typically volatile market.
Likewise, the company’s financial performance has shown significant improvement over the past three years, with net income rising from a $27 million loss to a $69 million gain.
BWX Technologies (BWXT)
BWX Technologies (NYSE:BWXT) stands out as a comprehensive provider of nuclear power technology and solutions, catering to various applications, including military, commercial, and medical uses.
Renowned for its military contributions, BWX Technologies has a long-standing reputation for designing and manufacturing nuclear reactors, delivering over 400 such reactors to the U.S. Navy.
The company is equally influential in the commercial sector, supplying more than 300 steam generators to nuclear power plants. BWXT also plays a vital role in managing about twelve crucial atomic sites for the U.S. government.
One of the most intriguing aspects of BWX Technologies’ operations is its involvement in nuclear medicine. The demand for advanced medical solutions is rising as the American population ages.
BWXT is well-positioned to benefit from this trend, as it manufactures medical isotopes and provides products essential for diagnostic imaging and radiotherapeutic treatments.
The company’s stock is surging this year, returning nearly 40% since January. Despite this recent bump, BWXT stock remains an attractive investment opportunity.
It is perceived as a long-term player poised to benefit from the ongoing nuclear renaissance, offering multiple avenues for profit across its diverse range of nuclear technology applications.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.