Atomic Investment: 5 Best Nuclear Energy Stocks to Buy

Best Nuclear Energy Stocks to Buy: As countries around the world work to combat the growing costs of climate change, green energy solutions are becoming increasingly attractive investments. One of the most overlooked clean energy technologies is nuclear power, which may play a critical role in helping the world transition off of fossil fuels in the coming years. Here are five of the most promising nuclear energy stocks to buy today for long-term returns.

 

NuScale Power (NYSE:SMR) is engaged in developing and commercializing small modular reactor technology to provide reliable nuclear energy on a distributed basis. The company’s modular reactors are small enough to be used locally but are also scalable. This makes them a versatile solution for meeting energy needs in a variety of contexts.

Small modular reactor technology is expected to be critical in the proliferation of nuclear energy. The market for SMRs is expected to grow at a CAGR of 15.8 percent between now and 2030, reaching a global size of $18.8 billion. Having already received approval from the US Nuclear Regulatory Commission for its emergency planning zone model, NuScale is a leading contender for bringing this technology to market in the United States.

 

Although NuScale has not yet generated any sales or earnings from its reactor technology, the company does have a respectable cash stockpile to fund research, development and marketing efforts. As of Q3, NuScale’s cash and cash equivalents totaled $268.6 million.

 

NuScale has also attracted the attention of institutional investors, which currently own about 30 percent of the company’s shares. In the last 12 months, institutional inflows have outweighed outflows by over 20 times. This suggests that hedge funds and investment banks may be betting on NuScale to deliver outsized gains as its technology comes to market.

 

While NuScale is far from a sure thing, the company shows a great deal of promise. SMRs are an important component of the next generation of nuclear energy, and NuScale is likely in the best position to commercialize these smaller reactors in the US market. With good short-term upside potential and excellent long-term growth possibilities, this nuclear energy stock could be an attractive buy for growth investors.

 

 

Cameco (NYSE:CCJ) is a uranium exploration and production company with sites in the US, Canada and Australia. While companies like NuScale that develop new nuclear technologies could be enormous winners in the future, the nuclear energy market is still ultimately driven by mining and uranium processing. As such, companies like Cameco act as pick-and-shovel plays on nuclear energy.

 

Cameco’s near-term upside potential is similar to NuScale’s. Analysts project the stock to reach a range of $30.31 to $34.83 in the coming year.

 

At the median target price of $32.92, Cameco would have a 51.6 percent upside potential when compared to its current price of $21.71. Cameco also enjoys a firm buy rating, with 7 of the 9 analysts covering the stock rating it as a buy.

Initially, Cameco appears to be overvalued. The stock trades at about 80 times forward earnings and nearly 6 times sales. The company’s earnings, however, are expected to grow by over 275 percent over the coming year. Over the next five years, analysts expect a compounded growth rate of over 50 percent for the company. Given these high growth rates, Cameco’s valuation begins to look much more reasonable.

 

Cameco also enjoys the stability of operating under long-term contracts for its processed uranium products. YTD, the company has secured contracts for a total of 50 million pounds of uranium, with another 27 million pounds under negotiation as of the end of Q3. New sites are currently being readied for production, increasing Cameco’s future production capacity.

 

With the nuclear energy market heating up, Cameco is one of the companies best positioned to profit from increased demand for uranium. This stock may suit more conservative investors looking for more reliable, less innovation-driven plays in atomic energy.

 

Like Cameco, Denison Mines (NYSE:DNN) is a uranium mining company. Denison’s geographic focus, however, is much tighter. The company operates primarily in Canada, where it enjoys 95 percent ownership of the Wheeler River mine site in the Athabasca Basin.

 

The Wheeler River site is an undeveloped site estimated to contain about 109.4 million pounds of uranium ore across two high-concentration deposits. Denison is currently exploring and planning to develop both deposits. Each deposit has an expected mining lifetime of about six years.

The median target price for Denison mines over the coming 12 months is $1.81, a gain of 55.1 percent over the current price of $1.17.

 

While Denison has a great deal of potential upside, analysts are not as unanimous on this stock as on NuScale and Cameco. The lowest target price is $1.17, identical to the current price. Given this fact, though, it seems unlikely that Denison mines will lose money in the coming months.

 

Denison Mines is ultimately a high-risk, high-reward stock. If the Wheeler River site is successfully developed, the company could have excellent long-term potential.

 

With that said, speculative mining stocks are famously risky and can produce large losses due to regulatory actions or other development difficulties. Investors who are comfortable with these risks, however, can sometimes reap large returns from such stocks.

 

NexGen Energy (NYSE:NXE) is another exploratory mining company based in Canada. NexGen has full ownership of the Rook 1 project, which seeks to exploit a large uranium deposit first identified in 2014. NexGen claims that this project has the potential to become the world’s largest source of low-cost uranium.

Like Denison Mines, NexGen is a high-risk, high-reward proposition. Over the coming 12 months, the median analyst price target for the stock is $6.74, up over 65 percent compared to the most recent price of $4.07.

 

Because NexGen has yet to achieve any sales, however, the stock’s price is based on the speculative value of the Rook 1 project.

 

Despite its risks, NexGen energy could be a winning stock if development of its project goes ahead. The payback period once the mine is operations is projected at less than one year. The nature of the deposits in question would also allow NexGen to scale production with relative ease, making it more responsive to market demand and allowing it to control operating expenses.

 

Energy Fuels (NYSE:UUUU) is a uranium and vanadium mining company focused on mineral production within the United States. The company is actively generating early sales and is expected to see positive earnings in the forward 12-month period.

 

Energy fuels could have the largest single-year upside among the nuclear energy stocks listed here. From its current price of $5.95, analysts expect the stock to rise to a median target of $10.46. This would produce a one-year return of over 75 percent. Energy fuels also has a unanimous buy rating from all 8 analysts covering the stock.

In Q3, Energy Fuels lost just $9.3 million, suggesting that it is near to profitability. The company also secured contracts with three utilities, giving it an active path to sell considerable quantities of its uranium. More recently, the company was awarded a contract worth $18.5 million to sell uranium to the US uranium reserve.

 

One of the strengths of Energy Fuels is its diversified mining focus. In addition to Uranium, the company is also developing sources of critical rare earth metals, most notably vanadium. These metals are of strategic importance to the United States amid the increasingly strained relations with China, which controls much of the world’s rare earth supply.

 

Although Energy Fuels is still an early-stage company, it is more developed than NexGen and Denison. As such, it occupies a middle ground between mature and speculative mining stocks. The company still carries risks, as it has not yet achieved profitability. With active sales underway, however, Energy Fuels is in a promising growth phase that could cause the stock to rise considerably over the coming year.

#1 Stock For The Next 7 Days

When Financhill publishes its #1 stock, listen up. After all, the #1 stock is the cream of the crop, even when markets crash.

Financhill just revealed its top stock for investors right now... so there's no better time to claim your slice of the pie.

See The #1 Stock Now >>