Prediction: These Will Be the 2 Best Nuclear Energy Stocks to Buy for the Next 5 Years

Nuclear power is the largest source of carbon-free electricity in the United States, providing 47% of the nation's zero-emissions power and more than wind and solar combined in 2023.

Not only is nuclear power cleaner-burning, but it also provides stable baseload power, enabling power plants to run 24/7 and making the power grid more reliable and better able to handle fluctuations in energy demand throughout the day. With these attributes, it's no wonder more countries are supporting the Declaration to Triple Nuclear Energy capacity by 2050.

As the use of artificial intelligence (AI) booms and data centers grow, more companies are turning to nuclear power to meet their long-term power needs. With that in mind, here are two nuclear energy stocks that I think are excellent stocks to buy and hold for the next five years -- and beyond.

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Cameco is one of the world's largest uranium producers

Cameco (NYSE: CCJ) owns controlling stakes in the McArthur River and Cigar Lake mines in Canada's Athabasca Basin. These are among the highest-grade mines in the world, supported by a network of roads and electricity and by fully permitted and licensed mills. They yield ore with a high uranium concentration, resulting in lower operating costs and a robust competitive advantage.

Over the next five years, Cameco has committed to delivering an average of 28 million pounds of uranium annually, enabling it to optimize inventory and prevent excess supply from flooding the market. In March, Cameco signed a massive $2.6 billion agreement with India's Department of Atomic Energy to supply 22 million pounds of uranium ore concentrate through 2035.

In addition to supplying uranium, Cameco benefits from the build-out of nuclear energy infrastructure. That's because it has a 49% ownership stake in Westinghouse, with Brookfield Asset Management (NYSE: BAM) controlling the remaining 51%.

In June, the U.S. Department of Energy (DOE) conditionally committed $17.5 billion in loan facilities to support U.S. nuclear reactors. This funding will help finance equipment for the construction of at least 10 Westinghouse AP1000 reactors, giving Cameco upside from both construction and fuel supply for these new facilities.

Cameco has a distinct advantage with its high-grade mines in North America and its stake in Westinghouse, which should provide long-term upside for the company. This year, the stock has experienced significant volatility as investors digest the news around the nuclear energy build-out. But with Cameco down 36% from its 52-week high, I think now is an excellent time to buy the stock.

Centrus Energy domestically produces key fuels for nuclear energy

Another nuclear energy stock that has undergone significant volatility in recent months is Centrus Energy (NYSE: LEU). While the stock has declined a whopping 66% from its 52-week high, the company is well positioned for the future of nuclear energy. That's because Centrus provides low-enriched uranium (LEU), the fuel used to power modern nuclear reactors.

Right now, Centrus sources nuclear fuel from global suppliers, including the Russian entity TENEX. However, it is actively expanding its domestic production. That's because in 2024, following Russia's invasion of Ukraine, Congress passed the Prohibiting Russian Uranium Imports Act, banning the import of unirradiated LEU produced in Russia. To prevent reactor shutdowns, the Department of Energy (DOE) issued waivers through Jan. 1, 2028, if no viable alternatives exist.

Centrus has a waiver that allows it to import this LEU through 2027, but it is taking steps to become a domestic producer of this key fuel. To do so, the company is expanding its Piketon, Ohio, facility to produce both LEU and high-assay low-enriched uranium (HALEU), the next-generation fuel used in advanced reactors developed by companies such as Oklo and Nano Nuclear Energy.

On July 1, Centrus finalized a $900 million task order with the U.S. Department of Energy (DOE) to support nuclear fuel production and expand its Ohio facility. This is an important milestone as the company pivots from demonstrating its ability to produce HALEU to large-scale commercial production.

Investors must keep in mind that Centrus is going through a capital-intensive phase as it expands its facility, which is expected to come online in 2029 and continue expanding through the 2030s. In the meantime, it will produce HALEU in smaller quantities for private commercial customers as it expands.

Centrus Energy should benefit from strong tailwinds for LEU and HALEU fuel as nuclear energy capacity expands, making it another solid nuclear energy stock to buy and hold for the long haul.

Courtney Carlsen has positions in Cameco and Centrus Energy. The Motley Fool has positions in and recommends Brookfield Asset Management and Cameco. The Motley Fool has a disclosure policy.