Nuclear energy is starting to make a comeback. Surging power demand from catalysts like artificial intelligence (AI) data centers and the continued shift toward cleaner energy are setting the stage for a resurgence in nuclear energy. According to Goldman Sachs, a growing number of countries are planning to triple their nuclear power capacity by 2050.
There are lots of ways to play the upcoming nuclear energy renaissance. NuScale Energy (SMR +3.50%), Constellation Energy (CEG +0.44%), and Cameco (CCJ 0.90%) stand out to a few Fool.com contributing analysts as some of the simplest ways to capitalize on this trend. Here's why they could help lead the charge in the coming decades.
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NuScale is taking reactors down a notch
Reuben Gregg Brewer (NuScale Power): Historically, nuclear power plants have been site-built, expensive, and time-consuming endeavors. NuScale Power is looking to change that with small modular nuclear reactors, also called SMRs. The company has two versions of its SMR technology that have been approved by the U.S. Nuclear Regulatory Commission, which management believes gives it a head start on its competition.
That's great, but this technology is still cutting edge in nature. What NuScale doesn't have is a reactor sale. It has a customer lined up in the form of RoPower, a Romanian utility company.
RoPower is working toward the go/no-go decision on six of NuScale's reactors. They will be chained together to create one large power plant. If RoPower signs on, it is likely that NuScale will have a much easier time inking its next deal. The final decision is expected to arrive in the next year.
NYSE: SMR
Key Data Points
The real issue here, however, is what NuScale's SMRs offer to customers. They are built in a factory, so they should be easier, cheaper, and safer to build. Their small size means they can be easily transported, placed where they are needed, and located closer to population centers. This is a sea change in the industry and could be a huge benefit to utilities and individual companies, such as data center owners, alike.
Sure, NuScale is still a money-losing start-up. But if you think long term and don't mind taking on some risk, NuScale could be an easy way for you to invest in the future of nuclear power.
A leader in producing nuclear power
Matt DiLallo (Constellation Energy): Constellation Energy is the country's top producer of clean electricity. It operates the nation's largest fleet of nuclear power plants, and also owns wind, solar, and hydropower facilities.
NASDAQ: CEG
Key Data Points
Top-tier technology companies are turning to Constellation Energy to help them secure the clean power they need to support their operations. Last year, Constellation signed a 20-year deal with Microsoft to supply power from Three Mile Island Unit 1 when it restarts in 2028. Microsoft will buy all the power (835 megawatts) generated by the unit, which had to shut down a few years ago due to economic reasons.
Fellow tech titan Meta Platforms signed a similar 20-year deal earlier this year. It will buy all the power from Constellation's Clinton Clean Energy Center (1.1 gigawatts). The agreement starts in June 2027, after the current support plan ends.
These agreements will help provide a big boost to Constellation Energy's earnings in the next few years. The company expects to grow its adjusted operating earnings at a more than 13% compound annual growth rate through 2030. That's a robust growth rate for a power company.
This outlook does not include the upside from Constellation's planned $16.4 billion purchase of Calpine. The deal will make Constellation the country's top clean energy company, adding Calpine's natural gas and geothermal plants to its nuclear and renewable fleets. Constellation expects the deal will boost its earnings per share by 20% next year and add at least $2 per share to its bottom line in future years.
As the nation's leader in nuclear energy, few companies are in a stronger position to benefit from its resurgence than Constellation Energy.
Uniquely positioned for the coming resurgence
Neha Chamaria (Cameco): Shares of Cameco hit an all-time high of $83.02 apiece on Aug. 29. It's not surprising to see the stock going parabolic. With nuclear energy making a comeback, Cameco is uniquely positioned to ride the wave.
NYSE: CCJ
Key Data Points
Cameco benefits from a nuclear energy resurgence in two ways.
First, it is one of the world's largest miners of uranium, the key fuel that powers nuclear reactors. As demand for electricity from low-carbon sources like nuclear rises amid a data center boom, many countries are facing the pressing need to plan and build more nuclear reactors. That's the biggest long-term tailwind for Cameco. For now, Cameco's core uranium segment also reported a 46% jump in pre-tax net income in Q2 on higher sales volumes and prices of uranium.
Second, Cameco owns a 49% stake in Westinghouse Electric, a leading provider of nuclear power plant equipment and technologies. Cameco earned a pre-tax profit of $126 million from Westinghouse in its most recent quarter, versus a loss of $47 million a year ago. That made up 39% of Cameco's total pre-tax net income, and those earnings came from Westinghouse's first deliveries of fuel reloads to Temelín and Dukovany nuclear plants in the Czech Republic. A fuel reload is the replacement of used fuel assemblies in reactors.
While Westinghouse should continue to make money for Cameco, the uranium miner had already secured commitments to deliver an average of 28 million pounds of uranium per year through 2029 as of June 30. Backed by a strong balance sheet to shield it from uranium price fluctuations, Cameco stock offers one of the simplest and "safest" ways to invest in nuclear.
