Last month, I delved into why 2025 might emerge as the "year of energy," taking into account the rising global energy demands and the ongoing strides being made in artificial intelligence.
What particularly piqued my interest was nuclear energy. It’s a standout as perhaps the only energy source that’s both affordable, environmentally friendly, and consistently dependable. Interestingly, nuclear energy is also one of the rare issues that sees bipartisan support in the U.S. Earlier this year, lawmakers overwhelmingly backed a critical nuclear energy bill. It sailed through the Senate with an 88-2 vote and the House of Representatives with a 393-13 tally, gaining approval from President Biden.
It’s impressive when you think about it; getting 97% of lawmakers to agree on almost anything is a feat, yet they came together to push forward the benefits of nuclear energy in the U.S.
Given this robust endorsement, it’s an ideal time to consider investing in sectors linked to nuclear energy, especially uranium, the key material driving this energy source. I’ve identified several promising investment opportunities, and here are three that stand out:
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Sprott Physical Uranium Trust (OTC: SRUUF)
This is the only publicly traded fund that directly holds physical yellowcake uranium. It’s like buying uranium at a bargain, essentially getting it for $0.96 on the dollar since it’s trading at a 4% discount to its net asset value. I’m optimistic about uranium prices rising in the future, but even if they don’t, there’s potential for profit just from this discount shrinking, which has already decreased from 9% to 4% over the past few months. The trust trades over-the-counter under the ticker SRUUF and is also available on the Toronto Stock Exchange. -
Global X Uranium ETF (NYSE: URA)
We briefly included this ETF in The Oxford Income Letter, but market volatility led to a stop-out. The ETF offers exposure to a mix of uranium stocks, although it’s worth noting there’s significant concentration in a few holdings. Twenty-six percent of the fund is in Cameco, North America’s largest uranium miner, and another 9% is in the Sprott Physical Uranium Trust. Half of its holdings are Canadian, but you also get a good spread of international stocks from countries like Australia, Japan, South Africa, the UK, and Kazakhstan. The dividend from this ETF is quite varied, with previous yields ranging widely, so consider it a bonus rather than a primary feature. The real draw here is the diversified exposure to uranium stocks. - BWX Technologies (NYSE: BWXT)
A fascinating company, BWX Technologies provides nuclear components and fuel to the U.S. government and is the only producer of small modular reactors for U.S. submarines and aircraft carriers. Government contracts certainly lend a level of financial security. Moreover, the company manufactures radioisotopes, one of which is key in a Novartis blockbuster drug. While it offers a tiny dividend of less than 1%, the potential for increasing dividends exists as business continues to grow. BWX stands out for its stability, being profitable and cash flow positive for over a decade, positioning it well within the nuclear sector.
Nuclear Energy on the Rise
As we move ahead, my focus will remain on companies linked to the nuclear energy and uranium markets. I can’t think of another industry—energy-related or otherwise—that garners as much support. With energy demand surging, limited supply, and a global push towards nuclear adoption from both the public and governmental sectors, nuclear energy is poised for significant growth. A decade from now, I believe we’ll look back and be amazed at how substantial it has become.
