Finding the best nuclear energy stocks is not at the forefront of most investors’ minds. The disaster at the Fukushima reactor back in 2011 pretty much put most of the investment community off nuclear energy stocks. In fact, many of the nuclear energy stocks being touted immediately after that event have been bearish to say the least.
Instead of looking at (so-called) hazardous nuclear energy stocks, investors have been pouring over cleaner green energy stocks. But the fact of the matter is that nuclear power isn’t going anywhere even though no one’s really talking about it right now.
That’s because the positive trade-offs outweigh the negatives when it comes to nuclear energy. For starters, nuclear energy is the most cost-effective way to generate large quantities of electricity. The same cannot be said for solar, wind, or other green energies.
Nuclear energy also uses uranium, which is far more abundant and less expensive to use than fossil fuels. On top of that, a little bit of uranium goes a long way. The same cannot be said for fossil fuels. Speaking of which, nuclear energy does not emit CO2 or contribute to greenhouse gas emissions.
There is an obvious trade-off as the Fukushina, Three Mile Island, and Chernobyl incidents show.
First, it’s expensive to dispose of nuclear waste. Second, nuclear accidents can spread radiation over a wide area. And those exposed to large amounts of radiation can get sick and die.
And that’s the trade-off; nuclear power is a relatively inexpensive way to generate energy quickly enough to meet our insatiable needs. While meltdowns can be catastrophic, they are fortunately quite uncommon.
This is why nuclear energy, despite events like Fukushima, continues to be in great demand. According to the World Nuclear Association, there are 437 nuclear power reactors operating in 31 countries plus Taiwan. In 2011, they provided 2411 kWh, or more than 11% of the world’s electricity. A typical 1000 megawatt (MWe) reactor can provide enough electricity for a modern city of up to one million people. (Source: world-nuclear.org, July 23, 2015.)
But the world’s demand for energy continues to grow at twice the speed of use. Again, another reason why so many countries around the world are clamoring for nuclear power. Today, over 60 power reactors are currently being constructed in 13 countries plus Taiwan; most notably in China, South Korea, the UAE, and Russia.
The future for nuclear energy continues to look bright. In all, more than 160 nuclear power reactors are planned and more than 300 are being proposed.
In addition to the five currently under construction in the U.S., there are plans for five new reactors. In Finland, construction is underway on a fifth nuclear reactor with plans for another one. France is building a reactor that should come online in 2016 while Slovakia will complete one in 2017. Belarus is building two large reactors.
Meanwhile, in Russia, six reactors are under construction with about 30 further ones planned. This will increase the country’s power capacity by 50% by 2030. China has 26 operating reactors with 24 additional reactors under construction. Close behind is India with 21 reactors in operation, six under construction, and 20 more planned.
This isn’t a ringing endorsement for the nuclear energy industry. It just shows that nuclear energy isn’t going anywhere. And trading at multi-year lows, it provides investors with great opportunities for long-term growth. Below are three nuclear energy stocks that could take advantage of our growing dependence of cheap energy.
Top 3 Nuclear Energy Stocks for the Second Half of 2015
Cameco Corporation (NYSE/CCJ, TSE/CCO.TO)
What makes a nuclear reactor tick? Uranium. Uranium is a heavy metal used as an abundant source of concentrated energy. While there are a number of companies that produce uranium, one of the largest producers is Cameco Corporation. (NYSE/CCJ, TSE/CCO.TO). (Source: cameco.com, July 2, 2015.)
Cameco provides about 16% of the world’s uranium production from mines in Canada, and the U.S. with 429 million pounds of proven and probable reserves. The company is also a leading provider of nuclear fuel processing services.
In addition to providing investors with a history of strong performance, Cameco provides an annual dividend of 2.41% or $0.32 per share. The company has never missed a dividend payment since its initial public offering in 1991 and has a history of increasing its annual dividend rate.
Flowserve Corp. (NYSE/FLS)
With operations in more than 55 countries, Flowserve Corp. (NYSE/FLS) is pumped to be recognized as the world leader in supply pumps, valves, seals, automation, and services to the nuclear energy, oil, gas, and chemical industries.
The company operates in five different industries: Power Generation, Chemical Processing, Water Resources, Oil & Gas, and General Industry. The company also provides an annual dividend of 1.50% or $0.72 per share.
Since the birth of the nuclear power industry in the 1950s, Flowserve has been the supplier of choice for safety and non-safety related products. It has also announced a number of recent nuclear contract wins, including a $30.0 million order to supply pumping systems to a power plant in Poland; engineering projects in South Africa and Morocco; and multiple orders for key pumping systems for the Lichterfelde Cogeneration Power Plant in Germany. (Source: Flowserve.com, July 23, 2015.)
Flowserve is trading at levels not seen since 2013. This is due in part to a decline in the oil and gas markets and strengthening of the U.S. dollar. That said, the company has taken measures to grow its business, most recently, its acquisition (January 2015) of SIHI will help it penetrate new markets.
Thanks to new technologies, the future of nuclear power is more promising than ever for brands like Flowserve Corp.
Perma-Fix Environmental Services Inc. (NASDAQ/PESI)
On paper, Perma-Fix Environmental Services Inc. (NASDAQ/PESI) looks like a pretty good long-term bet. The company is a global provider of nuclear waste management services. But it’s a small company. As with all stocks, you need to do further due diligence. (Source: perma-fix.com, July 23, 2015.)
Perma-Fix operates four nuclear waste treatment facilities and provides the most comprehensive mixed waste management services nationwide. The company provides management and treatment of radioactive and mixed waste for hospitals, research labs, and institutions, the Department of Energy, the Department of Defense, and the commercial nuclear industry. Perma-Fix is also involved in researching and developing new ways to process low-level radioactive and mixed waste.
Its Nuclear Services division provides decontamination, decommissioning, and demolition, facility management and operations, remediation, on-site project support, and nuclear power plant support.
While Perma-Fix shares have rebounded after hitting lows in the middle of 2013, it is still a small company that needs to prove itself in the long run. To that end, the company is developing new technologies that will allow it to bid on projects involving higher-activity enriched uranium and plutonium waste in the nuclear services market. (Source: perma-fix.com, July 23, 2015.)