Shares of Centrus Energy (LEU +11.26%) increased 53.7% in September, according to data provided by S&P Global Market Intelligence.
Centrus Energy, a leading U.S. supplier of nuclear fuel and enrichment services, benefited from news that the U.S. government is supporting policies aimed at boosting domestic production of nuclear materials. The company also announced it would expand its U.S.-based enrichment plant to support U.S. production and reduce reliance on foreign entities. Here's what investors need to know.
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Centrus Energy's leap comes amid growing support for U.S. nuclear production
On Sept. 15, U.S. President Donald Trump's administration announced that it would take steps to support domestic nuclear materials production and enrichment.
U.S. Energy Secretary Chris Wright recommended that the U.S. increase its strategic uranium reserve to help buffer against Russian supplies. Russian supplies were banned in August 2024. This ban won't be fully phased in until 2028, when waivers allowing limited Russian deliveries expire. This creates a significant need to replace approximately 25% of enriched uranium currently imported from Russia.
The recommendation to boost the uranium reserve boosted confidence across the industry, driving several uranium and nuclear stocks higher during the month.
Increased support from the federal government is a positive development for Centrus, which plans a major expansion to boost production of Low-Enriched Uranium (LEU) and High-Assay, Low-Enriched Uranium (HALEU). Centrus currently has two commercial agreements to sell LEU, one of which is with TEXEX, a Russian entity.
In the long term, Centrus aims to produce LEU and HALEU at its Piketon, Ohio plant, utilizing its advanced centrifuge technology. It is the only Nuclear Regulatory Commission (NRC) licensed producer of HALEU currently operating at scale for both commercial and national security applications.
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Key Data Points
The expansion of its Ohio plant hinges on Department of Energy funding, private investment, and long-term customer commitments. Centrus has raised over $1.2 billion and secured contingent purchase commitments of $2 billion from utilities. However, the full scale and timing of the expansion remain contingent on federal funding decisions from the Department of Energy.
With the U.S. signaling a willingness to support domestic production of key mineral resources, this is a good sign that Centrus could secure the necessary funding to expand its operations and become a top domestic supplier of LEU and HALEU uranium. While HALEU is not currently used in commercial reactors, it is essential for advanced reactor designs under development, making it critical for next-generation nuclear technology.
Centrus is well-positioned for a nuclear revival
Centrus Energy is riding the wave higher as uranium and nuclear power-related stocks surge. This demand is likely to persist, too, given the massive amount of energy required to power the data centers behind artificial intelligence (AI).
The company's Piketon facility has the potential to be crucial to domestic fuel production. However, scaling it will require time and capital and hinges on securing funding. The stock trades at a premium today, but for investors who believe in the long-term nuclear revival, Centrus is one way to gain exposure to it.
