"If McCain is elected, we would suggest USEC (NYSE: USU), a play on nuclear power," says value investor Nathan Slaughter.
The editor of Half-Priced Stocks says, "After slumbering for over 20 years, nuclear power will be satisfying a much larger percentage of the nation's energy-hungry appetite during a McCain administration."
"Currently, there are 104 nuclear plants in operation nationwide, which combined, account for 20% of the country's electricity. But both of those totals are set to rise markedly.
"Current forecasts suggest nuclear facilities could double their share and ultimately account for 40% of power in the U.S.
"There are several factors underpinning this resurgence in nuclear energy, not the least of which is $100 per barrel oil and elevated prices for natural gas and coal.
"Believe it or not, one kilogram of uranium-235 has the stored energy equivalent of 1,500 tons of coal. And while up-front construction expenses can be high, ongoing operating costs for nuclear reactors are running just $15-20 per megawatt hour, far cheaper than traditional plants.
"John McCain is an outspoken champion for the nuclear power movement, outlining ambitious plans to commit $315 billion towards the construction of 45 new reactors over the next two decades.
"Beyond that, he has a clear goal of achieving energy independence by building '100 new plants to power the homes and factories and cities of America.'
"All of this spells plenty of opportunity for USEC, owner of the nation's only uranium enrichment facility. The company is in the business of supplying fuel for commercial reactors around the world -- and competition is sparse.
"The firm also benefits from a longstanding nuclear non-proliferation treaty with Russia. Specifically, USEC participates in the salvaging of old Soviet nuclear warheads under the 'Megatons to Megawatts' program.
"The company has carved out a dominant market share and now supplies about half of the nation's enriched uranium (most of the rest comes from Russia).
"And even without any expansion of nuclear generating capacity, the firm's sales backlog has already ballooned to $6.5 billion, more than triple the revenues it reported all of last year. All of this should help keep earnings, which have expanded roughly ten-fold since 2003, moving forward.
"Finally, USEC is building the most advanced uranium enrichment plant in the world, a state-of-the-art Ohio facility that will use efficient centrifuge-based technology.
"Cost overruns and construction delays have caused many frustrated investors to pull the plug, sending the shares spiraling from $25 to around $5. As a result, the stock is now trading at less than half of its tangible book value."
