Make Money in Promising Nuclear Companies the Easy Way

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Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the nuclear energy industry to thrive as our planet continues to demand more and more energy and the recent Gulf oil spill reminds us that oil is problematic, the Market Vectors Uranium+Nuclear Energy ETF (AMEX: NLR  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Market Vectors ETF's expense ratio -- its annual fee -- is a relatively low 0.57%.

This ETF doesn't have the most impressive performance history, lagging the S&P 500 over the past three years. But it's still quite young, and what matters most is your expectations of its holdings, and thus its future. As with most investments, of course, we can't expect outstanding performance in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

What's in it?
Several of this ETF's components made strong contributions to its performance in 2011. Exelon (NYSE: EXC  ) , with an attractive dividend yield near 5%, has gained about 10% so far this year. Most of its electricity generation comes from nuclear power, but it also deals in fossil fuels and is expanding into alternative energies, having bought Deere's (NYSE: DE  ) renewable energy business. It also aims to buy Constellation Energy (NYSE: CEG  ) .

Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Uranium centrifuge maker USEC (NYSE: USU  ) is down 77% in 2011, partly because it didn't land as big a loan guarantee as it needs from the Department of Energy for research and development. It also sports high short interest. In general, uranium companies have had a tough year, with Ur-Energy (AMEX: URG  ) , for example, down by two-thirds.

EnergySolutions (NYSE: ES  ) dropped 35%, but its bulls like the fact that along with energy, it provides cleanup services.

The big picture
Demand for energy isn't going away anytime soon, and despite the recent disaster in Japan, nuclear power remains in demand. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Learn about the best dividend ETFs. And if you're looking for some great investments beyond ETFs, consider these 10 Stocks for Your Retirement Portfolio.

Longtime Fool contributor Selena Maranjian holds no position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of EnergySolutions. Motley Fool newsletter services have recommended buying shares of and writing a covered strangle position on Exelon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On November 28, 2011, at 2:55 PM, pebbles444 wrote:

    Has ES become a 'sell' stock because it seems to be going nowhere even on rally days? I'm a subscriber of MDP and Rule Breakers and I'd appreciate a response from any Motley Fool analyst.

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