Over two weeks ago a 8.9 earthquake hit off the coast of Japan, sending tsunamis to destroy the mainland. Once the tsunami hit, Japan had a new problem, nuclear reactors were failing and radiation was pouring out. Japan is still have trouble calming down those reactors and it looks like the worst may be over but it has caused the world to rethink nuclear energy as a good source of energy.
Friday, French president, Nicolas Sarkozy announced that France would be closing any of its 58 reactors that failed the European stress test. The United States is thinking about shutting down some of its reactors. As of 2009, nuclear energy makes up 20% of U.S. consumption, compared to just 14% consumption for the world (information from Nuclear Energy Institute, nei.org). According to citizen.org, the U.S. has spent more money on nuclear development than all other energy sectors combined.
As I look at the news this morning, I read that Germany and Italy are taking steps to expel nuclear energy all together. In Germany, 50,000 people are protesting against the continual use of nuclear energy. This is the turning point for nuclear energy. Although nuclear energy is in good supply, it is simply too dangerous and countries will now start to deviate away from nuclear energy and try other sources of energy that may not be as clean as nuclear, but they will be safer.
As an investor, this is an opportunity unfolding before our eyes. On Friday, natural gas was up 4%, as it could benefit from the shift out of nuclear energy. I would recommend Devon Energy (NYSE:DVN), Halliburton (NYSE:HAL), Chesapeake Energy (NYSE:CHK) for a natural gas play.
You are probably guessing that my next recommendation is to short nuclear stocks. However, I am recommending buying nuclear stocks. The fact of the matter is nuclear energy is in good supply and it is, for the most part, a clean energy source. Governments have limited options on alternative resources that are readily available. Billions of dollars have been spent over the decades to make nuclear energy abundant and a clean source for energy, they aren't going to simply throw all that hard work, research and an energy source down the tubes. This is simply a buying opportunity for investors, while countries around the world are in panic mode over what happened in Japan.
There are many ways to play nuclear energy. You could take a more broad route using ETFs such as: iShares S&P Global Nuclear Energy Index Fund (NASDAQ:NUCL), Market Vectors Nuclear Energy (NYSEARCA:NLR), Global X Uranium ETF (NYSEARCA:URA), and Global Nuclear Energy Portfolio (NYSEARCA:PKN). The other option is to buy individual stocks such as: Cameco Corp (NYSE:CCJ), which specializes in uranium mining and is the largest producer in the world of uranium; NRG Energy (NYSE:NRG) is a nuclear power plant play; Excelon (NYSE:EXC) is another utility, power plant play; Constellation Energy (NYSE:CEG) is a utility, power plant play; Entergy (NYSE:ETR) utility, a power plant play; Southern Company (NYSE:SO), a power plant play; and Uranium Energy Corp (NYSEMKT:UEC), a uranium miner.
As you can see there is a good list of options that you have in nuclear energy but it is always advised that you do your own research to understand the individual risks. Nuclear energy may not be the safest form of energy but it is decently clean and it is in abundance. The governments of the world do not have the money to start investing a lot of money in an alternative energy source right now. There is simply too much going on between Afghan War, Libya intervention, financial instability, Middle East instability, etc. Nuclear energy works and it will not be going anywhere anytime soon.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.