The Nuclear Power Comeback Is Real -- and These 3 Stocks Are the Best Way to Play It

Just a few years ago, the nuclear power industry was seemingly on its deathbed. The echoes of Fukushima were still ringing, and renewables like solar were finally cost-effective enough to move into the mainstream.

Much has changed -- or not changed -- in the meantime, however. Even though solar power is the United States' fastest-growing source of electricity, the U.S. Energy Information Administration reports that solar power still only accounts for about 4% of the nation's total power production. Wind and power combined only make up 17% of U.S. power generation, in fact, while nuclear is holding on at nearly 19%. A similar (although hardly identical) mix applies outside of the U.S. as well.

What gives? Simply put, reality is setting in. Solar and other renewables aren't doing enough fast enough to meet the ever-growing need for electricity, which, of course, is accelerating due to the ongoing proliferation of artificial intelligence (AI) data centers. The next-best immediate solution is well-proven nuclear power, which the International Atomic Energy Agency predicts could more than double capacity by 2050.

In other words, the nuclear power comeback is real. Here are three of the top ways to plug into this long-term undertow.

Image source: Getty Images.

1. Cameco

Some investors are so focused on their hunt for companies working on the next great nuclear power reactor technology that they're looking right past the opportunity staring them in the face. That's the fuel that these reactors perpetually consume: uranium-235. And as it turns out, there are very few companies that actually mine and prepare this material for nuclear power reactors. Cameco (NYSE: CCJ) is one of them.

Canada-based Cameco, while not the biggest company doing this, may be the best investment option for the simple reason that it's an integrated, soup-to-nuts player with mining, refining, and enrichment operations, as well as spent fuel storage. It's even the co-owner of Westinghouse, which makes and services nuclear reactor equipment, including nuclear reactors themselves.

Cameco did $3.5 billion in business last fiscal year and is expected to be about the same this year. And per-share profits are projected to increase only from $1.44 to $1.63 over the same two-year period. That's not a ton of encouraging growth.

Just wait. S&P Global Market Intelligence says worldwide annual uranium revenue is on pace to more than double between now and 2033, boosted by a modest but measurable rise in prices.

It's difficult to doubt this optimistic outlook, too. If nuclear energy is in the midst of a resurgence, the uranium required to make it happen isn't in infinite supply and must be mined and enriched. There's no readily accessible alternative in enough abundance.

2. GE Vernova

GE Vernova (NYSE: GEV) -- the energy-focused offshoot of General Electric, which decided back in 2021 to split itself into smaller, more manageable pieces -- is known for its wind turbines, natural gas turbines, power grid solutions, and the services that go along with these businesses. What it's not known for is being in the nuclear power industry.

Nevertheless, through a partnership with Japan's heavy equipment maker Hitachi, the company is slowly but surely expanding its footprint in the growing nuclear power industry. This includes the improvement of nuclear fuel technology, nuclear reactor service, and perhaps most importantly, the development of so-called small modular reactors (SMRs) that may represent a key aspect of nuclear power's future.

Just as the category's name suggests, GE Vernova's BWRX-300 small modular reactor can be built on-site where that power is needed to support localized uses ranging from desalination to refining to smelting to, yes, powering AI data centers. Although none are operational yet, installation work of this design has begun, which is expected to begin service sometime in 2030.

Once the premise is proven, look for demand to materialize quickly. Indeed, a recent outlook from Pacific Northwest National Laboratory (commissioned by the U.S. government) indicates the world is likely to have on the order of nearly 500 SMRs built by 2050, versus essentially none beyond the testing and experimental phase right now.

GE Vernova won't be manufacturing all of these, but it will certainly be able to leverage its familiar name to sell at least its fair share of small modular reactors.

3. Vistra

Finally, add Vistra (NYSE: VST) to your list of stocks to play nuclear power's comeback.

It's a utility company, albeit not a particularly well-known one. Not only does it not do consumer-facing business under the parent company's name, but its core business is actually energy wholesaling. With 44,000 megawatts of power-generation capacity, it largely serves Texas and most of the northeastern United States, though it has some exposure to the West Coast market.

Digging deeper into its business reveals it's not overwhelmingly a nuclear name -- at least, not yet. In fact, about 60% of electricity output comes from natural gas, versus only about one-fifth from nuclear.

That's changing, though -- and quickly -- now that the company sees the writing on the wall. It's inked power purchase agreements with Facebook parent Meta Platforms and Amazon, specifically calling for the development of new nuclear power production capacity. Look for Vistra to be much deeper into nuclear in the foreseeable future, which, of course, opens the door to supplying regional grids with nuclear-produced power from the same or parallel facilities.

Also know that, unlike most other utility names, this one isn't much into dividends. It's pouring almost all of its profits back into the business to grow its operation or to repurchase shares.

For perspective, since the $55 billion company authorized up to a $5.9 billion buyback in 2021, it's reduced its total outstanding share count by about 30% and still has $1.8 billion in authorized repurchase funding it expects to utilize by the end of next year. Yet, it's still been able to invest in new capacity as needed, growing its annual revenue from $12.1 billion to $17.7 billion during this four-year stretch. It's a sign of a well-run organization that just knows how to optimize its capital and assets.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Cameco, GE Vernova, Meta Platforms, and Vistra. The Motley Fool recommends Hitachi. The Motley Fool has a disclosure policy.