It seems like the media is touting and flaunting more and more for a return of nuclear energy.  This may or may not happen as the applications are again for "Next Year" and it is with no surprise that it’s becoming the topic of much labor in Mexico pronounced "Man-ya-na" (sorry no N~ without changing languages).    You can also see where spot Uranium prices have come down significantly from the pre-summer ramp and summer highs.  TradeTech’s Uranium site shows its price chart for Uranium and The Ux Consulting Company shows much of the same.  But with $80.00 per barrel of oil and T. Boone Pickens calling for even higher oil prices you never know just how long the "call for nuclear power" will take to resurface from the investment community.  Nuclear power is getting more media coverage again. 

Let’s assume for a moment that we forget about the discussions leading to delays that have been perpetual.  Let’s for get about the political side of nuclear power.  Lets forget about killing land under mountains where we’ll bury the stuff in Nevada.  And let’s forget about the potential environmental catastrophe that can result if something goes horribly wrong.

There are many stock plays in the U.S. alone that will be huge beneficiaries of this if even one nuclear power plant approval goes through.  If there is one, why not the full dozen of them.  Here is the lot of companies:

Shaw Group (NYSE:SGR) is perhaps the most vertical of the engineering and construction firms.  Fluor (NYSE:FLR) is also in there.  And we can’t leave out the monster General Electric (NYSE:GE) for new reactors, nuclear fuel, reactor services and performance services.

Cameco (NYSE:CCJ) out of Canada is THE go-to behemoth in the stock market for Uranium miners and producers.  The much smaller company in the US is USEC (NYSE:USU), although its shares were hit exceptionally hard Friday after testing started.  Some more smaller and much more speculative stocks in the sector are Uranium Resources, Inc. (NASDAQ:URRE), U.S. Energy Corp. (NASDAQ:USEG), Uranerz Energy Corp (AMEX:URZ), and even Canyon Resources Corporation (AMEX:CAU).  Mosaic (NYSE:MOS) and CF Industries (NYSE:CF) are stealth plays in the sector that can enrich uranium from phosphate, but you should know that prices have to be very high and have to be expected to remain very high for quite some time for those to be cost effective.

 

The Economist recent magazine cover also flaunted a comeback for nuclear power.It said America’s nuclear industry is about to embark on its biggestexpansion in more than a generation. This will influence energy policyin the rest of the world.  CNET today discussed the wave of coming applications for more nuclear power plantsthat are coming. Personally, I’m a believer in this.  No greenhousegases, no pollution, no icky air around the place.  But the dark sideis not Three Mile Island.  That was nothing.  The dark side isChernobyl and a vast area of land that won’t be habitable forgenerations and generations.  The other thing that might act as apossible lid on investors reviewing nuclear power stocks this timearound is that local gas prices for your car are far lower than earlier this year when energy prices were rising but not as high as the $80.00 seen this week.

No wonder Merrill Lynch got creditfor what seemed to be overly bullish analysis that ended up lookinglike they had a crystal ball for a few months.  They gave a huge safetynet for uranium prices. The Canadian National Post also gave some buyout picks in the sector based on Raymond James analysis.

Nuclear power plants are coming online more and more in China andIndia, and Japan and France are largely dependent upon the glowinggreen juice to power those nations.  Russia is showing it is expandingnuclear power use again and South Korea is expanding its program.  Noneof us in the Western hemisphere are going to be too excited about this,but the chances that we are going to have to deal with a nuclear-usingIran is getting larger instead of smaller.

Back in August an ETF was launched as the Market Vectors Nuclear EnergyETF that launched on the American Stock Exchange under the "NLR" ticker, but only a portion of these stocks in here are US-based and many names wont be familiar.  Here is the full list of the company stocks in the ETF.

Jon C. Ogg
September 14, 2007

Jon C. Ogg can be reached at [email protected]; he produces the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.

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