Regulators Extended the AP1000 Through 2066. Now a Developer Wants Up to 6 in Kentucky. One Stock Owns 49% of Westinghouse.

Cameco (NYSE: CCJ) is a supplier to the nuclear power industry, with a long history of mining and processing uranium. But in late 2023, Cameco partnered with Brookfield Asset Management (NYSE: BAM) and Brookfield Renewable Partners (NYSE: BEP) to buy Westinghouse. Cameco now owns 49% of Westinghouse, one of the world's largest service providers to the nuclear power industry. Here's why it is such a big deal, highlighted by some recent positive news for Westinghouse.

A more reliable business model

As a miner, Cameco is largely at the mercy of commodity markets for its revenues and earnings. When uranium prices are high, Cameco's business will perform well. When uranium prices are low, the company can fall into the red. To be fair, Cameco uses long-term contracts to mitigate the inherent volatility of its business, but only to a certain extent. The goal of creating an even more stable business is likely why it bought 49% of Westinghouse.

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Westinghouse's business generates a more stable income stream, which should help to smooth the peaks and valleys in uranium markets. But there's been an important change: the U.S. Nuclear Regulatory Commission (NRC) recently updated its assessment of Westinghouse's flagship AP1000 reactor. The main reason for the update was an examination of giant U.S. utility Southern Company's (NYSE: SO) Vogtle 3 and 4 power plants, which are both powered by the reactor. The NRC has now given its blessing for companies to use this design through 2066.

Given the cost and time required to build nuclear reactors, this is a big deal. And just a few days later, The Nuclear Company, which is privately held, announced it wants to use up to six AP1000 reactors in Kentucky. And that could be just the beginning, as the successful operation of Southern's Vogtle 3 and 4 gives others increasing confidence in the design. For example, the company is moving forward with a planned AP1000 unit in Poland, including the ordering of long-lead parts.

Cameco's Westinghouse stake could become a growth business

The original thesis regarding Cameco's investment in Westinghouse was likely about diversification to offset commodity volatility. However, the NRC update and The Nuclear Company announcement suggest that Westinghouse may be on the cusp of material growth. And that changes the bigger story for Cameco, which will benefit not only from increased demand for nuclear fuel from new construction but also from the construction itself.

Reuben Gregg Brewer has positions in Brookfield Renewable Partners and Southern Company. The Motley Fool has positions in and recommends Brookfield Asset Management and Cameco. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.