Nuclear Energy Stocks: A Clean Energy Investment for the Long Term

Nuclear energy is here to stay.

While it has faced dramatic setbacks over its 70+ year history, the technology has continued to develop, expand, and prove the lasting value as a consistent, clean energy source. 

  1. Exceptionally Clean: Nuclear power plants emit very low levels of greenhouse gasses compared to fossil fuel-based power plants. This makes nuclear energy a cleaner alternative in terms of air quality and combating climate change.
  2. Extremely Efficient: Nuclear energy has a very high energy density compared to other energy sources. A small amount of nuclear fuel can produce a large amount of energy, making it highly efficient.
  3. Reliably Continuous: Unlike solar and wind energy, nuclear power does not depend on weather conditions and can provide a continuous and stable power supply. This baseload reliability is crucial (more on this below).
  4. Sustainable Over the Long Term: With advances in nuclear technology, such as breeder reactors and the potential of fusion reactors, nuclear energy could become a long-term solution for global energy needs.
  5. An Alternative to Current Geopolitical Control: While nuclear energy has significant geopolitical drawbacks of its own, it does offer an alternative to the trillion-dollar monopoly of OPEC+ and international political wrangling that affects traditional energy.

As the world shifts away from the drawbacks of traditional energy sources like coal and gas, nuclear energy stands alone in its potential to produce large amounts of energy that can meet growing power demands.

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Nuclear Energy Is Essential for the Clean Energy Transition

Nuclear Energy Stocks: A Clean Energy Investment for the Long TermThe world’s major countries are working to move away from traditional energy once and for all — it’s no longer a matter “if,” it’s now a matter of “when.” And the momentum is increasing.

As countries transition to clean energy, the emphasis has shifted to sources that can provide reliable baseload power, which is the supply of electricity that’s needed to meet the minimum demand for electricity at all times. And nuclear energy is the only truly reliable source of clean baseload power. Nuclear power plants can operate 24/7, in any season, and in any weather. 

Nuclear energy is also the most efficient source on the planet. Aside from its high startup costs, it can operate continuously for decades.

Nuclear Energy Also Outperforms Traditional Energy

Nuclear power even offers immunity from problems in traditional power sources. 

For example, gas and oil power plants can’t safely operate at full capacity above 90 degrees, which led to widespread grid instability in Texas (which relies too heavily on oil) during the recent summer heat swells. In 2023, record high temperatures even threatened to bring down the entire power infrastructure — a fate narrowly avoided. Most nuclear power plants don't have these same limitations, and new designs continue to push its capabilities even further.

The Demand for Nuclear Is Growing 

The International Atomic Energy Agency (IAEA) estimates that capacity for nuclear energy will more than double by 2050.

Projected Growth in Nuclear Energy Capacity by 2050

These estimates are based on current demand scenarios. These estimates could be even higher if we see an increase in demand from new energy policies, an increase in cost competitiveness (which is likely with new technology), and the population and technological growth in the developing world.

The Risks of Investing in Nuclear Energy Stocks

Nuclear energy isn’t magic. As with any major energy technology, there are some limitations, and as an investor it’s important to bear a few things to bear in mind.

The first is public perception. While nuclear power remains the safest energy source we have, dramatic failures in Chernobyl and Fukushima have had an outsize effect on the public imagination. Even the Three Mile Island accident, which occurred in 1979, and had no injuries and minimal environmental impact when compared to disasters from other energy sources, has lingered in the public memory. But opinions are changing, and new safety technology has further reduced potential risks.

The second is the geopolitical realities of sourcing uranium. The war in Ukraine highlights how Russia’s monopoly on uranium production and refinement can tie the hands of supply and demand. But here, too, we’re seeing improvement, and diverse new sources of uranium can free the world from many of these geopolitical woes.

The third is waste disposal. Spent fuel must be taken seriously. In the US and elsewhere this has been well managed and so far has a relatively flawless track record. But radioactive waste will always be a background factor in nuclear operations. 

The fourth is regulation. Safety and environmental regulations are always changing, and nuclear energy has seen its biggest setbacks from NIMBY (Not In My Back Yard) politicians who loudly support nuclear’s benefits in principle, but then balk when it comes to completing actual projects in their jurisdictions. Increases in education and public support have helped ease some of these effects.

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Nuclear Energy Reclaims Its Investment Potential

New technology will reduce the risks and expand the profitable potential of nuclear energy, and a lot is ahead.

Most significant among them are the new SMR (Small Module Reactor) nuclear power plants championed by Bill Gates and others. They increase efficiency and reduce waste by using a special grade of refined fuel called HALEU (High-Assay Low-Enriched Uranium). SMRs are also considered much safer by design and could finally deliver a lower-cost, easier-to-build solution that nuclear advocates have been waiting for.

The money is already waiting in the wings. 2023 was a busy year for nuclear investment, with fresh investments from billionaires and hedge funds:

  • Billionaire Ken Griffin’s Citadel Investment Group increased its stake in Equinor ASA (NYSE: EQNR) by almost 70,000%, making it the top hedge fund holder in the company.
  • Paul Tudor Jones’ Tudor Investment Corp also initiated million-dollar positions in Uranium Energy Corp (NYSE: UEC).
  • Cliff Asness and his AQR Capital Management increased its holdings in Entergy Corporation (NYSE: ETR) by 181% to 137,653 shares worth $14.774 million. Steve Cohen’s Point72 Asset Management and DE Shaw’s DE Shaw Group bought massive stakes worth $150.308 million and $26.34 million respectively. 

It’s clear from these major investments that these billionaires expect strong growth from nuclear energy in the months ahead.

And they are getting significant support from the Biden administration through multiple channels. Not only did the Inflation Reduction Act earmark billions for nuclear energy and fuel, the Department of Energy announced a half-billion-dollar initiative to kick off the new year aimed at securing domestic uranium. 

You can put these actions to work in your portfolio to generate profit. 

Nuclear and other forms of clean energy are going to be a major market narrative in 2024, and could even decide the election. 

Click here to see how we’re positioning for this now. 

Make it your own,

John Carl

John Carl
Editor, Daily Profit Cycle