2 Nuclear Stocks That Are Quietly Becoming the Trade of the Year (and Beyond)

Global energy demand is exploding, and the world is facing a simple reality: We need more energy. While wind and solar have grown in popularity, modern technology is always on and needs reliable energy that can deliver power no matter what. Technology giants are increasingly embracing nuclear energy, and governments are paving the way for more nuclear energy in the coming decades.

Amid this resurgence, nuclear energy stocks are enjoying strong tailwinds that could persist for decades. Two nuclear stocks that are surging are Cameco (NYSE: CCJ) and BWX Technologies (NYSE: BWXT), gainin 103% and 82%, respectively, in the past year alone. Here's why these stocks can continue delivering for long-term investors.

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This top miner will help fuel the global nuclear build-out

In recent years, surging energy demand has come into focus, and countries are scrambling to meet the growing needs of artificial intelligence (AI) data centers. In the United States, there has been a major push for energy independence, and nuclear power is seen as a key pillar in making it possible. Under the Trump administration, the U.S. is pushing to advance nuclear technology and accelerate the build-out of nuclear-related infrastructure.

Cameco sits at the intersection of Western energy independence and the growing demand for nuclear power. The company is the largest publicly traded uranium miner in the world and the undisputed heavyweight of the Western world's uranium supply. Cameco supplies roughly 17% of the world's uranium and owns ultra-high-grade uranium mines at McArthur River and Cigar Lake in Saskatchewan, Canada.

The company has committed to delivering an average of 28 million pounds of uranium per year over the next five years, which enables it to optimize its inventory and prevent excess supply from flooding the spot market. Cameco also signed a huge $2.6 billion long-term agreement with India's Department of Atomic Energy to supply 22 million pounds of uranium ore concentrate through 2035.

While Cameco is a major player in the uranium mining space, it also offers investors upside from the nuclear energy infrastructure build-out through its 49% stake in Westinghouse Electric. Westinghouse is a behemoth in the nuclear energy technology industry, and nearly half of the operating nuclear power plants rely on its technology. In November 2023, a consortium comprising Cameco and Brookfield Renewable Partners acquired Westinghouse for $7.9 billion.

Last year, Westinghouse, Cameco, and Brookfield entered into a partnership with the U.S. Department of Commerce to accelerate the build-out of Westinghouse reactors across the United States. The deal, valued at around $80 billion, would see Westinghouse build as many as 20 of its large-scale AP1000 reactors across the country. On top of that, Westinghouse is developing the AP300 small modular reactor (SMR) and hopes to deploy it in the early 2030s.

Cameco stock has run up significantly over the past few years as investors have grown more bullish about the budding nuclear energy industry. More recently, the stock has pulled back 22% from its 52-week high. Given the long-term tailwinds from growing demand for nuclear energy, I think the dip is an excellent opportunity for long-term investors to scoop up the stock.

BWX Technologies' monopoly provides the ultimate economic moat

BWX Technologies is a picks-and-shovels stock in the nuclear industry. It doesn't mine or own power plants, but it does provide the specialized equipment and fuel needed for nuclear energy and nuclear medicine. The company has built up expertise and manufactures the complex, high-precision equipment used in nuclear reactors.

The company manufactures components for nuclear reactors, including steam generators, reactor pressure vessels, and piping. It also manufactures components for next-generation SMRs, including those for the BWRX-300 SMR by GE Vernova and Hitachi, as well as advanced reactors for the U.S. military. It also leverages its nuclear infrastructure to manufacture medical isotopes used in cancer diagnostics and targeted therapies.

What makes BWX compelling for investors is its virtual monopoly on supplying fuel to the U.S. Navy. For over 70 years, BWX has been the exclusive provider of nuclear reactors that power the Navy's fleet of aircraft carriers and submarines, including the Virginia-class and Columbia-class subs. Because these military-grade reactor cores are highly complex and sensitive, it's difficult for competitors to break into this space, giving BWX a government-backed monopoly with a multibillion-dollar backlog.

BWX Technologies is in a strong position as a defense contractor crucial for national security, while also offering you an opportunity to invest in the AI revolution and nuclear energy build-out. For investors looking to capitalize on the nuclear energy revolution, BWX is another compelling stock to buy and hold for the long haul.

Courtney Carlsen has positions in Cameco and GE Vernova. The Motley Fool has positions in and recommends BWX Technologies, Cameco, and GE Vernova. The Motley Fool recommends Brookfield Renewable. The Motley Fool has a disclosure policy.