- These three best nuclear energy stocks can charge up your portfolio in 2024.
- BWX Technologies (BWXT): BWX is an all-encompassing nuclear play covering construction, defense, healthcare, and commercial power applications.
- Duke Energy (DUK): Duke is one of the country’s largest nuclear power operators.
- Global X Uranium ETF (URA): This fund gives investors diversified exposure to the uranium industry.
A decade ago, it would have seemed implausible that even the best nuclear energy stocks would recover. After the Fukushima accident in Japan, nuclear power was low. Governments were shutting down plants in countries such as Germany, and there was minimal interest in building new plants in the United States or other key electricity markets.
However, nuclear stocks are suddenly white-hot once again. As the world looks to move away from fossil fuels, nuclear energy has reemerged as a leading transition power source from today’s coal- and natural gas-driven grid to renewables.
While nuclear has some challenges, such as waste disposal, it is carbon-free, works 24/7 and delivers tremendous amounts of power with a tiny amount of land use. These are major advantages compared to green alternatives such as wind or solar energy.
Thanks to the prior slump in the nuclear industry, there has been minimal investment in nuclear solutions or uranium mining over the past decade. Demand has revved back up again, but is outstripping supply. These are three nuclear stocks poised to benefit as the industry charges up again.
BWX Technologies (BWXT)
BWX Technologies (NYSE:BWXT) is a one-stop shop for all things nuclear. The company does everything from nuclear-related environmental clean-up to reactor construction, fuels and even nuclear medicine applications for hospitals.
There are multiple avenues for growth at BWX Technologies. A big opportunity today is in providing nuclear solutions for the U.S. Navy. Given tensions in the Middle East and concerns around Taiwan’s political situation, it seems likely that the government will allocate more money for the Navy and, thus, BWX’s power solutions going forward.
On the commercial side, there seems to be building momentum around nuclear power. Given renewables’ stumbles over the past year, more investors and utility companies are looking for large, cheap sources of reliable carbon-free baseload power. Nuclear fits the bill perfectly.
Duke Energy (DUK)
As nuclear power’s reputation improves, operators of nuclear plants will benefit.
Duke Energy (NYSE:DUK) is the most obvious winner. It operates 11 nuclear plants in North Carolina and South Carolina. These units generate approximately 10,700 megawatts of power, representing a massive chunk of the Carolinas’ power consumption. And Duke generates this electricity at some of the lowest costs in the country.
Investors punished Duke in the past for cost overruns in some of its infrastructure construction. Higher interest rates, in general, have been negative for utility companies, including Duke.
However, with the nuclear renaissance now upon us, Duke should earn a higher valuation multiple thanks to its leading space in the industry. Duke shares trade at a reasonable 17 times forward earnings and offer a generous 4.2% dividend yield.
Global X Uranium ETF (URA)
Another way to play the revival of nuclear power is by owning the fuel source: Uranium. However, the mining industry can be difficult to pick individual stocks given the high uncertainty around individual projects, geopolitical risk, funding of new mines, etc.
As such, a reasonable option for exposure to uranium is via an exchange-traded fund (ETF) such as the Global X Uranium ETF (NYSEARCA:URA).
This gives owners a broad basket of holdings across the uranium space, with 50 companies in the portfolio as of the time of this writing. Given the amount of uranium from potentially unstable developing countries, owning a basket of uranium producers should offer investors the upside of the asset class while minimizing downside risk from any one mine or company thanks to diversification.
URA shares are up 43% over the past year. And the price recently matched the fund’s previous all-time high, which was set back in 2021. URA shares should launch to new heights if the nuclear story picks up more buzz.
This post originally appeared at InvestorPlace.
On the date of publication, Ian Bezek held a long position in BWXT stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.