Two New Tailwinds for the Nuclear Renaissance

Dear subscriber,

This week on Wall Street, a new energy future is taking shape...

Oklo (OKLO) – a startup working to produce nuclear power via small reactors – won a major deal with the U.S. government.

On Wednesday, the company announced that the Defense Logistics Agency Energy – the procurement arm that buys fuel and power for U.S. bases – has issued a notice of intent to sign a long-term power-purchase agreement for one of Oklo's 75-megawatt microreactors.

The microreactor will supply power to the Eielson Air Force Base in Alaska. Eielson sits just south of the Arctic Circle and spends heavily on diesel and coal for power and heat. A nuclear reactor will make the site much more sustainable and secure.

Now, these microreactors are still in development. Oklo has no revenue yet – but with this new contract, that's changing...

Microreactors like the ones Oklo produces are a huge step up in the energy industry. They're between 100 and 1,000 times smaller than conventional nuclear reactors, which means they can be more easily transported to remote areas (like Eielson in Alaska).

So far, Oklo's shares are already up roughly 20% this month.

This is only the latest in the nuclear renaissance that's taking shape in the U.S...

In May, President Donald Trump issued a flurry of executive orders to boost our nuclear power production. They deal with things like streamlining the production and recycling of nuclear fuel... making it easier to build, test, and get permits for nuclear reactors... and encouraging the use of nuclear technology in military applications.

Shares of all sorts of nuclear-related stocks soared on that news, too... continuing a trend that has been driving the energy market for the past year.

This is quite a reversal. For decades, nuclear power has suffered from bad publicity.

Nuclear accidents are rare, but they garner a lot of headlines. Chernobyl, Three Mile Island, Fukushima – everyone knows these names as shorthand for disaster.

Historically, environmentalists have considered nuclear power unsafe for both the environment and humankind.

But compared with other power sources, nuclear energy has actually turned out to be one of the safest in the world, second only to solar...

Environmentalists now see carbon emissions as the main villain.

And since nuclear energy produces zero emissions, it went from an environmental threat to an environmental darling.

Nuclear's image improved over the past decade or so... though it really took off with the emergence of artificial intelligence ("AI").

When ChatGPT was released in November 2022, it kicked off a national frenzy over generative AI.

Forward-thinking investors immediately realized that AI would require massive amounts of electricity to run the giant data centers being built.

Whether you're training a model or using one, AI takes a lot of computing power. A big data center, for instance, can use as much power as an entire U.S. city.

As a result, demand for electricity is on the rise...

For about 15 years, electricity consumption in the U.S. was flat. Now, it's expected to grow by 2% to 3% per year.

Low-single-digit growth doesn't sound like much... But it takes a massive investment to add that much power to the grid. The International Energy Agency estimates that global investment in electricity will reach $1.5 trillion this year.

With numbers that high, it's clear that nuclear energy simply must become a bigger part of our power generation.

And investors seem to realize this, as the stocks of nuclear-related businesses and commodities have started to surge.

Of course, there are a few ways to play the nuclear-energy boom...

First, there are the big utility companies that use nuclear power plants to deliver electricity to customers.

Investors usually consider utilities to be boring, old dividend-payers. They're steady, but slow growers.

While all utilities have surged on the new expectations for power demand, those with nuclear operations have done even better.

Take Constellation Energy (CEG)...

The company owns a variety of facilities that produce nuclear, solar, wind, and other renewable energy. It was spun out of the more traditional utility company Exelon in 2022.

Constellation operates 15 separate nuclear-power projects in the U.S. In September, it announced that it would restart the reactor at Three Mile Island. And just last week, Constellation announced a 20-year deal with Facebook parent Meta Platforms (META) to provide nuclear energy to some of Meta's data centers.

Constellation was supposed to be a dull power utility – but shares are up sixfold since the spinoff...

Stansberry Research has been tracking the nuclear story for a long time.

In fact, we first wrote to readers about Constellation back in 2007, prior to its merger with Exelon. And we recommended the company in May of last year, when it traded for $210 per share. Now, it's near $300 per share.

While Constellation operates existing nuclear plants, there are also a small number of companies trying to innovate in the industry – like Oklo.

These companies want to make what are called small modular reactors ("SMRs") – which can be built in a factory and transported by a flatbed truck – rather than the giant, multibillion-dollar power plants that have been the standard in recent years.

This is new tech, so the path to profits is riskier and longer than that of the established nuclear-power producers. But if it catches on, there's a ton of upside for investors.

And again, the market is already warming up to this idea. Oklo went public via a special purpose acquisition company ("SPAC") in May 2024. After a slow start, shares have soared more than 500%...

We first wrote to readers about Oklo in March, when the stock was trading around $31 per share. It's now more than double that, at roughly $65 per share.

Another way to bet on nuclear energy is by directly betting on the price of uranium...

Uranium is the fuel that feeds nuclear power plants. The energy released by uranium weighing as little as a penny is equal to the amount of energy from five tons of coal.

You can invest in companies that mine uranium. And there are several funds that track the price of the metal.

In 2022, we recommended one such fund to Stansberry Research subscribers – the Global X Uranium Fund (URA) – at $18 per share. Today, it currently trades at $36 per share...

There's no question that nuclear energy will be a key part of our energy generation from here... and that there are opportunities to profit.

The remaining question then is... are you too late to profit from this nuclear renaissance?

A decade ago, nuclear energy had three big hurdles to jump...

First, environmentalists had to be swayed. Now they've come around to favor nuclear power. And a majority of Americans now favor building more nuclear power. (In 2016, only 43% of Americans wanted more nuclear plants. That's up to 56%.)

Second, regulators made building new nuclear power extremely onerous. But that red tape is coming down, and construction is getting streamlined.

The final problem was capital. The specifics of the nuclear business have made financing these projects tough.

That's because nuclear energy costs a lot of money. And the projects can take years to build, so it can be a long time before any revenue comes in. That wasn't an attractive prospect for many investors.

But the recent nuclear renaissance makes that easier...

Now, these companies can sell shares at high prices to raise money. Oklo, for instance, just filed to raise an additional $400 million by selling shares. NuScale Power (SMR), another small, nuclear-energy company, is in the process of raising $200 million. Uranium miner Cameco (CCJ) sold half a billion dollars' worth of bonds last year. And Duke Energy (DUK), which operates 11 nuclear power plants, sold more than $2 billion worth of bonds.

This boom in interest and the rise in these companies' share prices make the outlook for nuclear much more promising...

Of course, there are things to watch for.

These stocks do have high valuations now, which always brings some extra risk.

AI may also be a bit overhyped. That doesn't mean it's not a legitimate technology. But it's possible that financial markets will cool on the AI story, just for a bit.

If that happens, electricity expectations may pare back, and nuclear stocks could take a breather.

There are also concerns that some provisions in Trump's proposed tax bill will slow nuclear power development... working counter to his executive orders.

Regardless, it's a key industry investors need to watch – one that keeps getting wildly positive news.

And even if you're not going to invest in nuclear power, it's still refreshing to know that advances in technology and changes in the regulatory environment are clearing a path to cleaner, cheaper energy.

What Our Experts Are Reading and Sharing...

Researchers at Apple (AAPL) released a technical paper called "The Illusion of Thinking" that argues AI reasoning models aren't really thinking. The researchers find they can get reasoning models to "collapse" once they hit a certain level of complexity. For a more accessible recap of their findings, check out this article from science and technology website Futurism.

OpenAI's ChatGPT went down for more than 24 hours earlier this week. A huge outage isn't a good look. But given the loud outcry on the Internet, it's clear that many people are now using AI on a daily basis.

Meanwhile, OpenAI's CEO, Sam Altman, published a blog post on Tuesday claiming "we are past the event horizon" and that "humanity is close to building digital superintelligence." But don't worry, he says that any changes will be a "gentle singularity" and that the next decade may not be much different. As he writes, "People will still love their families, express their creativity, play games, and swim in lakes." (Altman was also the chairman of the board at Oklo until recently.)

New Research in The Stansberry Investor Suite...

At Stansberry Research, we've done deep research on one particular industry.

No, we're not still talking about nuclear energy (though, as we've demonstrated, we have quite the history of researching nuclear companies as well).

Rather, this is one industry that many investors ignore because they find it dull or unrewarding.

But that's a mistake... because they're missing out on what we consider to be the best business in the world.

In this week's Stansberry Investor Suite research, Bryan Beach discusses a recently completed comprehensive study on these companies – and the results were surprising.

The stocks in this industry would've been some of the best you could have possibly owned through the recent tariff drama that scared so many investors.

Importantly, the data shows that even if you had simply bought a small collection of the top stocks in this industry – as ranked by one of our Stansberry's Investment Advisory monitors – and completely ignored valuation metrics, you'd still have beaten the market by a wide margin.

Bryan explains it all in this week's issue... including just why these stocks make for such outstanding investments, how we developed a unique method for assessing and valuing these stocks, and, of course, what this new data means for our ranking system going forward.

Stansberry Investor Suite subscribers can read the entire report here.

If you don't already subscribe to The Stansberry Investor Suite – and want to learn more about our special package of research – click here.

Until next week,

Matt Weinschenk
Director of Research

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