Best nuclear energy stocks to watch

Nuclear Energy stocks in brief

Nuclear energy stocks are shares in companies involved in the lifecycle of nuclear power. They include businesses mining uranium — the primary fuel used in nuclear reactors — at source, which are most impacted by commodity pricing, in addition to reactor manufacturers, which engage in some of the most complex engineering on the planet, and nuclear power plant operators, which generate consistent revenue from selling energy but are subject to high levels of regulation and operational costs.

The sector is perhaps divisive from an ESG perspective. While nuclear is considered to be crucial to a net zero world given its ability to provide a steady supply of energy with minimal greenhouse gas emissions, the radioactive waste the sector creates can last for millions of years. Nuclear is also somewhat distrusted given the Chernobyl and Fukushima disasters, regardless of advancements since.

As with all sectors, there are advantages and drawbacks to nuclear energy stocks. On the plus side, nuclear power provides a consistent and reliable source of energy, making it a reasonable complement to renewable sources like wind and solar. This can also make the sector attractive to income investors.

Nuclear is also green (though not strictly renewable), and despite the associated radioactive waste, produces significantly fewer greenhouse gas emissions compared to fossil fuels like oil, coal or gas. The sector is also increasingly seeing better government support, especially as hydrocarbons are expected to run low over the next few decades. This all makes for a high growth sector — which also means increased technological advancements — for example, in small modular nuclear reactors.

However, building a uranium mine or a nuclear power plant is usually very expensive, and very time-consuming. Construction can cost billions of dollars, and it often takes over a decade to go from first spade to operational. This can represent a significant risk, especially as uranium prices and government policies fluctuate. Investors are often also wary of the costs associated with decommissioning mines or plants, especially as they come closer to the end of their useful life.

There’s also inarguably safety concerns and public perception challenges, and most importantly, the well-publicised difficulty of disposing of nuclear waste. It remains dangerous for thousands of years, and there’s even an entire branch of symbolism — nuclear semiotics — or long-term nuclear waste warning messages, intended to deter human intrusion at nuclear waste repositories over the next few thousand years.

Overall though, all energy sources have their own negatives, and nuclear appears to sport fewer downsides than most.