In a world focused on reducing carbon emissions, some believe that nuclear will be an essential part of a no or low-carbon energy future. Even as some are going away from it, other countries are taking a fresh look at nuclear and what it has to offer. This includes Australia which in December 2019 had a parliamentary committee recommend partially lifting the current ban on nuclear energy and continue research into how nuclear technology can be used in Australia. 

Unfortunately for investors, the options to position oneself for long-term growth in the nuclear industry are limited. Many of the companies in the space are small, illiquid, and/or have nuclear as a relatively small part of their overall business. However, here are a couple of options for investors to consider.

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Nuclear Technology Companies

There are a number of large industrial and construction companies like General Electric (NYSE:GE) with operations in the nuclear space. These companies participate in the building of nuclear components, reactors, and/or power plants. In most cases though, this part of their businesses makes up a small percentage of their income. However, there is one company that gives investors undiluted exposure to the nuclear industry: BWX Technologies (NYSE:BWXT).

BWX "is a specialty manufacturer of nuclear components, a developer of nuclear technologies and a service provider with an operating history of more than 100 years." Its primary customer is the US government which accounts for about 80% of their total revenues. In addition to the services provided to the US government, the company provides products and services to the nuclear power and medical industries.

Uranium Miners

An investment in uranium and uranium miners is a play on the fuel source of the nuclear industry.  While not necessarily 100% correlated, the growth of the nuclear industry should be a net benefit for those invested in uranium assets. 

Currently, though, the price of uranium is depressed. There are multiple reasons for this, but overall, it seems to come down to oversupply and shrinking demand since 2011 when the Fukushima incident occurred. This has made it difficult for uranium miners leading some to cut production and/or close mines in order to preserve their assets. Cameco (NYSE:CCJ), a Canadian miner, reported in its 2019 third quarter Management Discussion & Analysis that "not only does it not make sense to invest in future primary supply, even the lowest-cost producers are deciding to preserve long-term value by leaving uranium in the ground." Cameco itself is an example of this as the company has decided to buy uranium on the open market to meet its obligations instead of continuing to mine their reserves at these prices. 

However, Cameco sees demand turning around "with four new reactors beginning commercial operation so far in 2019, about 50 reactors under construction, a number of reactor construction projects recently approved, and many more planned." It states that much of the growth is primarily coming from the Middle East and Asia. 

So, for patient investors, uranium miners like Cameco, Denison Mine (NYSEMKT:DNN), Nexgen Energy (NYSEMKT:NXE), and Energy Fuels (NYSEMKT:UUUU) may be worth considering now while their business is slow. There are a few large companies like Rio Tinto (NYSE:RIO) and BHP Group (NYSE:BHP)  which mine uranium, but just like with the nuclear technology companies, this makes up a relatively small amount of their business.

What about utility companies?

You may notice that utility companies have not been specifically mentioned here. This is because as customers of the nuclear industry, I do not believe that they will necessarily benefit from growth in the industry. They may see benefits from new and improved technology, but they would likely be hurt if uranium prices increased following higher demand.

While the future of nuclear is far from certain, there are options for the long-term investors who want to position themselves for a resurgence in nuclear energy. As can be seen from the actions of the miners, this is not expected to happen overnight. However, for investors playing the long game, nuclear may be an alternative energy play worth considering.