USEC: Rising Costs Making A Nuclear Winter (USU)

USEC Inc. (NYSE: USU) is one of more widely followed stocks that is in the group of companies et to benefit from the coming nuclear power surge in the coming years.  There is just one problem, well two.  The first problem is that this has already fallen some 60% from major highs over the last year.

But the second problem is earnings and future expenses.  The U.S. uranium enrichment company disclosed that its plan to build the second uranium enrichment facility on Piketown, Ohio to supply fuel to nuclear energy reactors could run about 50% over budget. It is starting to sound like a familiar reason: pricing pressure on labor, commodities, and construction materials like steel and aluminum is rising much higher than anticipated. 

Early last year it forecast a $2.3 Billion cost, but now it is forecast at $3.5 Billion. USEC is trying to take steps to transfer the American Centrifuge technology to strategic suppliers to build the machines and the balance of plant infrastructure.

Shares were up 3.9% to $9.25 today, but shares are down some 19% at $7.50 today in after-hours trading and the 52-week trading range is $6.95 to $25.65.

• Last week Business Week went too speculative on one of these uranium stocks.
• Recently, McDermott realigned its nuclear operations.
• Entergy is spinning off its operations in nuclear.
• It looks like media pumped nuclear all up at the top.

Jon C. Ogg
February 25, 2008