Nuclear power has become a hot topic this year, capturing investors' attention with its long-term potential. Over the past year, the Global X Uranium ETF has surged 65% higher. Meanwhile, upstart nuclear companies like Oklo (OKLO 3.89%) and Nano Nuclear (NNE 2.71%) have experienced significant fluctuations, with their stocks now up 278% and 21%, respectively.
There has been a wave of enthusiasm for nuclear energy stocks. However, Oklo and Nano Nuclear are both high-risk stocks in the space, given their long timelines to commercial viability.
For investors seeking exposure to the nuclear and broader energy sectors, Constellation Energy (CEG +0.96%) has serious portfolio power and is a better buy today. Here's why.
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Oklo and Nano Nuclear look to reimagine nuclear power
Nuclear energy is regaining favor. In recent years, numerous countries have signed pledges to triple their nuclear energy capacity by 2050. Public support is near record highs, and nuclear power is also receiving bipartisan support for its ability to deliver clean, baseload power.
Oklo and Nano Nuclear are two upstart companies looking to reimagine nuclear power as we know it. Oklo has its advanced fission reactors, also known as Aurora powerhouses. These small reactors are designed to utilize recycled nuclear fuel and could help meet the demand for power from data centers, industrial operators, or even small communities.
NYSE: OKLO
Key Data Points
Nano Nuclear develops even smaller, portable, industrial-scale reactors to bring power to remote sites, including mining sites, island communities, and disaster relief zones. These microreactors generate only 1 to 2 megawatts (MW) of output power, making them ideal for military and industrial applications, as well as a viable option for space use.
However, investing in either Oklo or Nano Nuclear Energy is risky. Both companies are pre-revenue and have no commercial product. For example, Oklo's first Aurora reactor is not expected to be operational until 2027 or 2028.
Meanwhile, Nano Nuclear is investing heavily in research and development of its microreactor technology. This is still in its early stages. Commercial deployment is even further off than it is for Oklo; most likely not until the 2030s at the earliest. In the meantime, Nano will look to establish a supply chain for uranium mining, HALEU fabrication, and nuclear fuel transportation.
NASDAQ: NNE
Key Data Points
Oklo and Nano Nuclear are pre-revenue, have no product yet, and have long timelines before they begin generating meaningful revenue. Like for all start-ups, these early stages are critical to their success and depend on funding, research and development, and regulatory approvals before they can scale up and, ideally, turn a profit. Failure to execute on this could be detrimental to the companies at this point in their life cycle, making them inherently risky for investors buying today.
Constellation Energy is making money today and has secured huge deals
One nuclear stock that is a better buy today is Constellation Energy. With 14 nuclear generating stations and a generating capacity of around 22 gigawatts (GW), Constellation is the largest nuclear plant operator in the United States and a leading producer of renewable energy.
The company owns a slew of assets in the energy space all across critical regions in the U.S., including the western half of the PJM region (a key U.S. electricity market and transmission system covering 13 states and Washington, D.C., serving over 65 million people) and the MISO region (which spans the Midwest and Plains regions and parts of the South).
NASDAQ: CEG
Key Data Points
Constellation operates its nuclear plants at best-in-class levels, with an average nuclear capacity factor of 94.6% over the past three years. This 4-percentage-point improvement over the industry average since 2013 translates into higher revenue per reactor for Constellation, along with more reliable energy that can continue to produce power during peak demand periods.
Constellation has secured several major deals over the past year. This includes a 20-year power purchase agreement (PPA) with Microsoft and the restart of Three Mile Island Unit 1. It also agreed to a 20-year PPA with Meta Platforms, which will purchase the entire output from the Clinton Clean Energy Center in Illinois. Finally, it was awarded $1 billion in combined contracts from the U.S. General Services Administration (GSA) to supply power to more than 13 government agencies.
Constellation Energy's near-term outlook is clearer
Oklo and Nano Nuclear are developing innovative technology that could revolutionize the way nuclear energy is deployed. Their products could bring clean, reliable energy to remote places or industrial facilities. However, it will be years before their products are operational, and investing in these stocks is a risky endeavor.
Constellation Energy, on the other hand, owns a portfolio of energy assets, including the largest nuclear energy footprint in the U.S., and stands to benefit from rising energy demand in the coming years, making it a more attractive investment for investors today.
