India, China and the Opportunity in Nuclear Energy Stocks

Includes: CCJ, D, EXC, GE, LEU
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President Bush might visit India in February; that could be a boon to nuclear energy stocks. According to the Indian press, President Bush will visit India in mid-February. The proposed Civilian Nuclear deal between the two countries will again be in the limelight.

Bush’s visit could create interest in nuclear energy stocks. The Civilian Nuclear Treaty that was proposed in July 2005 during the Indian Prime Minister’s visit to Washington still needs Congress approval. However, with so much at stake the treaty should eventually be approved.

Note also: Rice endorses India’s quest for nuclear energy.

According to Peter Wells, marketing manager for GE Energy’s nuclear business, we’ll see 29 new plants in China over the next 15 years and 17 new ones in India. We could also see a few plant opening up in the US in next 5 - 10 years.

How can investors play the growth in nuclear energy? According to Michael Brush,

One way for investors to play the growing use of nuclear power -- and other alternatives to fossil fuel like wind and solar power -- is to own shares of equipment producers like General Electric (NYSE:GE). It isn’t exactly a pure play. But it stands to benefit from double-digit revenue growth in these areas.

Near-term, the best way to play nuclear power is to hold shares of electrical utilities that own the most nuclear plants. Power companies like Exelon (NYSE:EXC), Entergy, and Dominion Resources (NYSE:D) had the foresight to snap up dozens of nuclear plants on the cheap in recent years. Now they have a cost advantage as the price of natural gas, coal and oil shoot higher, squeezing competitors that make most of their electricity from fossil fuels.

Another approach -- for long-term investors -- is to buy shares of uranium mining and enrichment companies like Cameco (NYSE:CCJ) and USEC (USU).

The US utilities won't benefit from the growth in India and China. That leaves GE, CCJ and USU.

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