No one can ignore the push in the United States and elsewhere across the globe to move away from a dependence on fossil fuels and into a more environmentally friendly, low carbon emission means of producing energy, and in particular electricity. Feeling this push, politicians are moving to formulate plans by which electricity can be produced in an environmentally sound manner.
Despite the recent advancements in clean coal technology, coal fired power plants are still targeted as public enemy number one by the environmental movement. The United States, however, is still very much dependent upon coal as its primary supplier of electricity and no other environmentally friendly sources have proven that they are capable of supplying even close to as much energy as coal at a price that is cost feasible. But there is perhaps an exception that is becoming more cost feasible. That is nuclear power.
American politicians seemed to have turned their attention to nuclear power to help produce emission free electricity. Presidential candidate John McCain recently stated that he would like to see 45 new nuclear facilities built by the year 2030 and pledged 2 billion taxpayer dollars a year to help make that a reality. It is very likely that a proposal such as this will come to fruition no matter which party is elected and having funds like this available make nuclear power a cost feasible method of producing emission free electricity.
The first thought that investors will have in looking to play this coming boom in nuclear power will be to buy up stock in the owner/operators of the nuclear plants such as companies like NRG Energy (NRG). The issue with this is that even with such substantial federal subsidies in the pipeline for building these new plants it is likely that the nuclear power companies will still have to make a substantial initial investment in each reactor they build because of the hefty up front cost. Furthermore, with electricity being a regulated product, the profits that these companies can make will be capped.
The best way to play the future nuclear boom is to look to the most integral suppliers for the production of nuclear power: the uranium producers. The uranium producers' stocks right now have bargain basement prices and they stand to profit immensely in the coming years as nuclear production begins to ramp up.
The recent decline in prices of uranium has hammered the stock prices of uranium producers such as Uranium Resources Inc. (URRE) and Denison Mines Corporation (DNN). There are many factors to blame for the recent decline in prices and the first is that the 2006-2007 run-up in uranium prices was caused by a worldwide surge in demand and also by speculators frantically buying uranium in anticipation of a surge in nuclear capacity only to sell when they realized that the surge was still years off.
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