The question isn't if nuclear energy is making a comeback, but why? There are several answers, starting with the realization by many world governments that wind and solar won't be sufficient to meet ambitious carbon reduction goals.
Another thing to consider is that nations are setting aggressive climate goals at the same time as energy demand worldwide is at all-time highs. A key reason for the growing demand comes from data centers. The average artificial intelligence query takes 10x the amount of energy as a Google search.
There is also a geopolitical component. For European countries, the Russian invasion of Ukraine has crystallized the need to be energy-independent, and nuclear energy is a way to achieve that.
In this special presentation, we look at seven stocks (across many levels of the nuclear energy supply chain) that can help investors capitalize on the demand for nuclear energy.
Quick Links
- Constellation Energy
- Nano Nuclear Energy
- Energy Fuels Inc.
- Cameco
- Centrus Energy
- NuScale Power
- VanEck Uranium and Nuclear Energy ETF
#1 - Constellation Energy (NASDAQ:CEG)
If you’re researching nuclear energy stocks to buy, it’s good to start with a leader. Constellation Energy Corp. (NASDAQ: CEG) is the largest producer of carbon-free energy and the largest nuclear plant operator in the United States.
Investors have been treated to a 131% gain in the last 12 months. This raises the logical question: does the stock have further to climb?
In its June 2024 investor presentation, the company forecasts earnings to grow at a compound annual growth rate (CAGR) of more than 10% through 2028. Analysts project a 20% increase in earnings in the next 12 months but only assign a 9% increase to the stock’s price. That could be due to the premium that investors are paying. CEG currently trades for 28.8x earnings, which is in line with its forward P/E ratio.
However, Constellation has announced plans to potentially construct next-generation nuclear plants on its existing sites. The company is doing this specifically to meet the growing power needs of data centers.
About Constellation Energy
Constellation Energy Corporation generates and sells electricity in the United States. It operates through five segments: Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions. The company sells natural gas, energy-related products, and sustainable solutions. It has approximately 33,094 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas, and hydroelectric assets.
Read More - Current Price
- $235.42
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $280.36 (19.1% Upside)
#2 - Nano Nuclear Energy (NASDAQ:NNE)
Nano Nuclear Energy Inc. (NASDAQ: NNE) is a vertically integrated nuclear energy company, which means it has several related business units. In this case, Nano Nuclear is developing next-generation nuclear energy technologies, including its Zeus solid-core battery reactor, ODIN low-pressure coolant reactor, and Advanced Fuel Transportation (AFT) and Haleu Energy Fuel (HEF) subsidiaries.
If you need convincing that nuclear energy will be a fast-growing sector, consider that the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy Act (ADVANCE Act) was passed with overwhelming bipartisan support in both chambers of the U.S. Congress. This is relevant to Nano Nuclear because it provides funding and reduces regulatory costs for developing and deploying new nuclear technologies, including microreactors.
The risk for investors is that NNE stock has only been trading publicly since May 2024. The company is not yet profitable and is generating little to no revenue. However, if you believe in the emerging technology narrative, this stock could be a multi-bagger in waiting.
About Nano Nuclear Energy
NANO Nuclear Energy Inc operates as a microreactor technology company. The company is developing ZEUS, a solid-core battery reactor, and ODIN, a low-pressure coolant reactor. It is also developing a high-assay low-enriched uranium fabrication facility to supply fuel to the nuclear reactor industry and fuel transportation and nuclear consultation businesses.
Read More - Current Price
- $23.15
- Consensus Rating
- Buy
- Ratings Breakdown
- 2 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $58.00 (150.6% Upside)
#3 - Energy Fuels Inc. (NYSE:UUUU)
Colorado-based Energy Fuels Inc. (NYSE: UUUU) is the first mining stock on this list of nuclear energy stocks to buy. Although it’s been mostly flat since April 2024, the spot price of uranium is up approximately 54% in the year ending July 8, 2024. And to keep up with the demand for nuclear reactors, uranium prices will eventually head higher.
That makes this a good time to consider Energy Fuels. The company claims it has the only conventional uranium mill operating in the United States. Energy Fuels expects to more than triple its output of U3O8 in 2024 and increase production further next year.
Based on this, the company’s revenue shot higher in its most recent quarter. Plus, it managed its first profitable quarter. That trend is expected to continue, and the Energy Fuels analyst forecasts on MarketBeat give the stock a Moderate Buy rating with an $8.67 price target that provides a 46.4% upside.
About Energy Fuels
Energy Fuels Inc, together with its subsidiaries, engages in the extraction, recovery, recycling, exploration, permitting, evaluation, and sale of uranium mineral properties in the United States. The company produces and sells vanadium pentoxide, rare earth elements, and heavy mineral sands, such as ilmenite, rutile, zircon, and monazite.
Read More - Current Price
- $6.94
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 2 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $8.50 (22.6% Upside)
#4 - Cameco (NYSE:CCJ)
If Energy Fuels is too speculative for you, it could be a good time to consider Cameco Corp. (NYSE: CCJ), the world’s largest publicly traded uranium company. The Canadian-based miner focuses helping convert uranium into fuels.
CCJ stock is up about 12% in 2024, but, since June, has been showing some weakening. This could reflect an oversupplied market. And at 34x forward earnings, investors are paying a premium for the stock.
Nevertheless, analysts continue to be bullish on CCJ stock. The consensus Buy rating comes with a $59.50 price target, which would be 22% higher than its price on July 8, 2024. Plus, Cameco is one of the few stocks in this space that pays a dividend. It’s not much to speak of, but it could be a reason for investors to hold the stock, particularly with it offering a respectable entry point below $50.
About Cameco
Cameco Corporation provides uranium for the generation of electricity. It operates through Uranium, Fuel Services, Westinghouse segments. The Uranium segment is involved in the exploration for, mining, and milling, purchase, and sale of uranium concentrate. The Fuel Services segment engages in the refining, conversion, and fabrication of uranium concentrate, as well as the purchase and sale of conversion services.
Read More - Current Price
- $57.61
- Consensus Rating
- Buy
- Ratings Breakdown
- 7 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $66.56 (15.5% Upside)
#5 - Centrus Energy (NYSE:LEU)
Centrus Energy Corp. (NYSE: LEU) is a global supplier of nuclear fuel components and services. One of the company’s core business units deals with low-enriched uranium. The ADVANCE Act, recently passed by Congress, “authorizes significant investments to bolster the domestic uranium enrichment capacity.”
This includes high-assay low-enriched uranium (HALEU), which is essential for advanced nuclear reactors and is likely to become the new standard. Centrus is the only U.S. company licensed to make HALEU, which it has been producing in small quantities.
Now may be an ideal time for investors to take a close look at Centrus. LEU stock is down over 23% this year as its recent quarterly earnings reflected the supply-demand imbalance with uranium. However, analysts believe this imbalance is temporary and have a $67 consensus price target, which is 67% higher than the LEU stock price as of July 8, 2024.
About Centrus Energy
Centrus Energy Corp. supplies nuclear fuel components and services for the nuclear power industry in the United States, Belgium, Japan, and internationally. The company operates through two segments, Low-Enriched Uranium (LEU) and Technical Solutions. The LEU segment sells separative work units (SWU) components of LEU; natural uranium hexafluoride, uranium concentrates, and uranium conversion; and enriched uranium products to utilities that operate nuclear power plants.
Read More - Current Price
- $75.14
- Consensus Rating
- Hold
- Ratings Breakdown
- 1 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $92.00 (22.4% Upside)
#6 - NuScale Power (NYSE:SMR)
The nuclear energy sector has locks and keys. NuScale Power Corp. (NYSE: SMR) is a provider of locks in the form of advanced small modular reactors (SMRs) that will be essential for next-generation nuclear power generation.
The U.S. Department of Energy (DOE) is prioritizing the production of low-enriched uranium (LEU) as part of its strategy to ensure, in part, the future deployment of cutting-edge nuclear technologies such as the SMRs that NuScale produces. Investors should take note that the company already has received U.S. Nuclear Regulatory Commission certification for one of its designs, which is likely to lead to a key first-mover advantage.
SMR stock is up 271% in 2024 and has shown no sign of slowing down despite a miss on the top and bottom lines in its first quarter earnings report. Analysts do have a consensus Hold on the stock, which they suggest could have an 8% downside. However, a recent (late June) upgrade by B Riley suggests that SMR stock could have an upside price target of $14.
About NuScale Power
NuScale Power Corporation engages in the development and sale of modular light water reactor nuclear power plants to supply energy for electrical generation, district heating, desalination, hydrogen production, and other process heat applications. It offers NuScale Power Module (NPM), a water reactor that can generate 77 megawatts of electricity (MWe); and VOYGR power plant designs for three facility sizes that are capable of housing from one to four and six or twelve NPMs.
Read More - Current Price
- $25.73
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 5 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $10.39 (59.6% Downside)
#7 - VanEck Uranium and Nuclear Energy ETF (NYSEARCA:NLR)
The nuclear energy sector holds a lot of promise, but investing in only one or two stocks may invite more risk than you’re comfortable with. If this sounds like you, the VanEck Uranium and Nuclear Energy ETF (NYSEARCA: NLR) is a solid choice to consider.
The 17-year-old fund tracks a market-cap weighted index of 28 companies in the global nuclear energy industry. As of July 2024, it had $225.62 million of assets under management and an expense ratio of 0.61%, which is comparable to other thematic ETFs.
Since its inception, the fund has fallen 69% from its peak in 2007 to its trough in March 2020. However, in the last five years, the NLR fund has been up 60%, including a 40% gain in the 12 months ending July 8, 2024. A good bit of that gain is being fueled by interest from institutional buyers, who have been heavily buying shares in two of the last three quarters.
About VanEck Uranium+Nuclear Energy ETF
The VanEck Uranium+Nuclear Energy ETF (NLR) is an exchange-traded fund that mostly invests in stocks based on a particular theme. The fund tracks a market-cap-weighted index of companies in the global nuclear energy industry. NLR was launched on Aug 13, 2007 and is managed by VanEck.
- Current Price
- $92.37
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 2 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $92.37 (0.0% Downside)
There have been many false starts regarding nuclear energy in 2024. So why is this time is different?
Consider this information from the World Nuclear Association: There are currently 60 nuclear reactors under construction in 16 countries. Between 2011 and 2020, 65 nuclear reactors were either shut down or did not have their operating licenses extended.
You should also consider that the American energy grid needs rebuilding right at the time that demand for energy, particularly from data centers, has never been higher. This makes a powerful case for nuclear power.
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