How to Invest in Nuclear
Nuclear power has been around for decades, but has come into focus as a potentially important piece of the global energy equation much more recently. This power source involves creating nuclear fission, which produces heat and energy.
Nuclear power is a controversial subject; because it is clean and relatively cheap, some argue that increased adoption would help to reduce dependence on fossil fuels. But there are also concerns about safety, which intensified in the wake of the 2011 earthquake in Japan and resulting nuclear crisis.
Nuclear power is not a traditional commodity, as this term in fact refers to a source of power as opposed to a specific resource. But nuclear power is closely related to global commodity markets, as demand for this fuel source impacts the prices of various energy resources.
Investing directly in nuclear power is not possible, but there are a number of options for gaining exposure. Investors can buy stocks of companies that produce nuclear power or supply raw materials, and there are multiple ETFs dedicated to the nuclear power industry. Investors even have the option of buying uranium futures.
Ways to Invest in Nuclear
There are 3 ways to invest in Nuclear: ETFs, Futures, and Stocks. Click on the tabs below to learn more about each alternative.
What are Nuclear ETFs?
While there are no ETFs offering exposure to nuclear power inputs directly, there are multiple products that focus on companies operating in the nuclear power industry. These nuclear ETFs include the Market Vectors Uranium + Nuclear ETF (NLR), PowerShares Global Nuclear Energy Portfolio (PKN), and iShares S&P Global Nuclear Index Fund (NUCL). In addition, the Global X Uranium ETF (URA) offers exposure to companies that are involved in the production of uranium, a key input to nuclear power.
What are Nuclear Futures?
Investors looking for exposure to nuclear power have the option of investing in exchange-traded Uranium swap futures. Uranium futures are a hedging tool for producers and users of uranium. They also provide a transparent forward price mechanism for the volatile uranium marketplace. These financial instruments are very thinly-traded, so achieving exposure in this manner may be challenging.
Uranium futures trade on the NYMEX under the symbol UX, with each contract representing 250 pounds of U308. These contracts are priced in dollars and center per pound, and trading is conducted in 60 consecutive months. The Floating Price for each contract month is the month-end spot U3O8 price published in Ux Weekly for the contract month by Ux Consulting Company, LLC. Uranium futures utilize financial settlement.
How to Buy Nuclear Stocks
There are a number of publicly-traded companies engaged in various aspects of the nuclear power industry, including providers of nuclear materials (such as uranium), equipment manufacturers, and operators of nuclear power plants. The prices of these stocks generally exhibit a strong correlation to demand for nuclear power, making them an intriguing option for investors who believe that nuclear power usage will increase in the future.
Nuclear power companies include AMEC PLC, Iberdrola SA, Cameco Corp., and JGC, Corp.
For a more complete list of nuclear power companies, see the following sources:
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