3 Best Nuclear Stocks to Buy in January

Artificial intelligence (AI) took the world and the stock market by storm in early 2023 and hasn’t slowed down since. Investors have flocked to companies that develop and produce the chips to power AI models, cloud companies that build massive AI data centers, and even software companies that deploy AI applications.

However, the energy required to drive all this innovation could become an increasingly hot topic in the coming years. According to estimates of Wells Fargothe electricity consumption of AI technology could increase from 8 terawatt-hours in 2024 to 652 terawatt-hours in 2030. Nuclear power could help solve this challenge. Emissions could discourage the use of fossil fuels, and renewables remain too intermittent to rely on alone. This opens the door to nuclear energy, which is efficient and clean.

AI’s long-term energy needs could help drive growth for companies exposed to nuclear power, so consider buying these top three nuclear stocks in January

Uranium is the fuel used for nuclear fission, i cameo (NYSE:CCJ) is one of the main producers of uranium. The Canadian company accounts for about 18% of the world’s uranium supply and has controlling interests in uranium mines in Canada, the United States and Kazakhstan. The company is poised for long-term growth as major technology companies and entire countries look to nuclear power as a way to meet energy needs while reducing carbon emissions. For example, Metaplatforms recently announced plans to source nuclear power to power its AI data centers, starting in the early 2030s.

CCJ Revenue Chart (TTM). — Income from the CCJ (TTM) data for YCharts

It is becoming clear that nuclear power is gaining momentum. According to the International Atomic Energy Agency, 63 nuclear reactors are currently under construction, and demand for nuclear power could grow to 2.5 times its current capacity by 2050. In addition, geopolitical tensions, including a US ban on uranium imports from Russia, could further boost business for Western producers such as Cameco.

Cameco’s business has increased over the past two years. Analysts estimate that the company’s revenue will reach $2.3 billion by 2025. Assuming governments and corporations continue to support nuclear power, this could be the first stages of a very long growth story.

Those who don’t want a pure nuclear investment might consider it Company of the South (NYSE: SO)one of the largest energy companies in the United States. Its core businesses include electricity generation and electric and natural gas utilities serving more than 9 million customers. Utilities produce reliable revenue streams because society’s energy needs never stop. Southern Company’s energy production also spans a variety of sources, including gas, coal, nuclear and renewables.

Southern Company has invested heavily in nuclear power. It operates eight total power units across three plants, and its newest units were the first recently built in the US for commercial operations in three decades. At the beginning of this year, Microsoft i Constellation energy signed a 20-year deal to restart a nuclear unit at the Three Mile Island nuclear power station in Pennsylvania to power its data centers. This potential game changer for the industry opens the door for Southern Company, located near Virginia, the nation’s data center capital, to do something similar.

SO PE ratio chart (below). — SO PE relationship (forward) data for YCharts

Meanwhile, the stock offers a 3.5% dividend yield, rewarding shareholders for holding onto the stock. It’s not the cheapest utility at 20 times earnings, but it’s not unbearable for long-term investors, especially if AI tailwinds drive Southern Company’s long-term growth.

The long-standing conglomerate General Electric was split into pieces and its energy business, GE Vernova (NYSE: GEV)now stands on its own. GE Vernova is a diversified clean energy technology company engaged in clean power generation, grid electrification, and wind and gas turbines. Its power generation business includes nuclear, providing reactors, fuel, utilities and steam turbines for electricity generation.

Society is slowly and steadily transitioning from fossil fuels to cleaner energy alternatives. This change will take many years, potentially positioning GE Vernova for a multi-decade growth opportunity. Management is currently forecasting high single-digit revenue growth through 2028. GE Vernova is also investing a cumulative $5 billion through 2028 in research and development to drive long-term growth.

GEV PE ratio chart (below). — GEV PE ratio (forward) data for YCharts

The stock isn’t cheap, with a forward P/E ratio of 124. However, analysts estimate the company will grow earnings by an average of 46% annually over the next two years, so strong earnings growth comes with this price Investors who are unsure about buying here can pounce now and buy more aggressively if the stock pulls back. That said, it’s hard not to like the stock’s long-term potential amid rising electricity demand and a clean energy transition.

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Wells Fargo is an advertising partner of Motley Fool Money. Randi Zuckerberg, former CMO and Facebook spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the aforementioned stocks. The Motley Fool has positions and recommends Meta Platforms. The Motley Fool recommends Cameco and Constellation Energy. The Motley Fool has one disclosure policy.

3 Best Nuclear Stocks to Buy in January was originally published by The Motley Fool

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