9 ways to play the nuclear power surge advertisement
With 50 new nuclear reactors expected to go online by 2020, potential winners abound in this once-beleaguered field. Here are some of the best plays.
By Michael Brush
Last week, when President Bush urged the nation to take action to deal with rising energy costs, his comments confirmed what many experts have been saying all along: It's time to go nuclear.
And thanks to record gas prices and looming fossil-fuel shortages -- not to mention an expected big spike in the demand for electricity in the next decade -- a nuclear renaissance may indeed be at hand.
"It is not a matter of if, but when," says Dan Keuter, the vice president for nuclear business development at Entergy (ETR, news, msgs), a power company. "We are very bullish on the outlook for nuclear power."
Because global electricity consumption will double in the next 25 years -- while reserves of fossil fuels begin to run dry -- experts believe at least 50 new nuclear power plants will be up and running by 2020. Most of the plants will be built in China and India, but ground could be broken on three or four plants in the U.S. in as little as five years. It has been three decades since a nuclear plant was built in this country. Start investing with $100. Explore our new ETF center.
One way for investors to play the growing use of nuclear power -- and other alternatives to fossil fuel like wind and solar power -- is to own shares of equipment producers like General Electric (GE, news, msgs). It isn’t exactly a pure play. But it stands to benefit from double-digit revenue growth in these areas.
Near-term, the best way to play nuclear power is to hold shares of electrical utilities that own the most nuclear plants. Power companies like Exelon (EXC, news, msgs), Entergy, and Dominion Resources (D, news, msgs) had the foresight to snap up dozens of nuclear plants on the cheap in recent years. Now they have a cost advantage as the price of natural gas, coal and oil shoot higher, squeezing competitors that make most of their electricity from fossil fuels.
Another approach -- for long-term investors -- is to buy shares of uranium mining and enrichment companies like Cameco (CCJ, news, msgs) and USEC (USU, news, msgs).
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