Nuclear fusion is the process of forcing light atomic nuclei (typically hydrogen) together to form a heavier nucleus (such as helium), releasing massive amounts of energy. It is the power source for the sun and stars, and is being researched as a clean, carbon-free energy source.
Commonwealth Fusion Systems is currently building a fusion plant in Richmond, VA. Fusion for a long time has been the dream. Unlimited clean energy that can power homes and make dirty fossil fuels no longer necessary while also taking away the fear of the radioactive waste that current nuclear power plants produce by using fission from elements like Uranium. What many people don’t know is that there are reactors that can resuse nuclear waste over and over again to the point that the waste would only be dangerous for 50 - 100 years instead of the commonly thought 20,000 years.
Tech companies have been trying to sign contracts with power companies that will use fast reactors. A fast reactor is an advanced nuclear reactor that uses high-energy, fast-moving neutrons to sustain a fission chain reaction, unlike conventional reactors that slow neutrons down (thermalize). They can burn existing nuclear waste, create more fuel than they consume (breed), significantly improve fuel efficiency, and operate with inherently safer features like low pressure and self-regulating fuel expansion.
This matters because in the short term, meaning 1 - 5 years, data centers can continue to expand and operate AI software while having the necessary power to do so which brings up the future of Uranium.
While, it is my humble opinion that long term fission reaction will not be a thing, in the short term there will be money to be made because these reactors will need Uranium to provide the necessary power.
There are 3 stocks that Wall Street has been busy trading that I also find interesting. Cameco Corporation or CCJ, Uranium Energy Corporation or UEC and Uranium Royalty Corporation or UROY.
Cameco Corporation: A Canadian miner, Cameco’s stock has been flying recently due to the increasing price of Uranium and the deals it has signed with companies like Westinghouse. Just recently, Cameco through its joint venture with Westinghouse, signed an 80 billion dollar deal with the U.S. Department of Commerce the supports new nuclear reactor construction by 2030. The cost of producing Uranium for Cameco is currently around $46 per pound. The current spot price for Uranium is around $93 per pound. Cameco as a strategy signs long term agreements so that the changing spot price will not affect its business. They are a profitable company and even pay an annual dividend.
Uranium Energy Corporation: Uranium Energy Corporation has multiple projects in areas including Texas, Wyoming and Canada at a cost of $34.35 per pound. Since UEC sells at the Spot price of Uranium they are maximizing profitability over consistent long term revenue. UEC is like the smaller alternative to Cameco or could be an additive to a Cameco position.
Uranium Royalty Corporation: If you like speculation this is an interesting play. The Company's long-term strategy is to gain exposure to uranium prices by owning and managing a portfolio of geographically diversified uranium interests, including uranium royalties and streams, debt and equity investments in uranium companies and holding physical uranium from time to time. They are currently receiving some royalties, however small from some Cameco projects. To buy this stock you would have to trust the people in charge to make the right deals to bring money to the company. Currently the price of this stock is $4.62 and the shares outstanding is 138.35 million which means should this idea work you could see significant price appreciation due to the tight float.
The bottom line is that with 16 -17 percent of total global production Cameco is the clear winner for safe investment over time even though with a current price of $123.39 you’ve missed a lot of the run, the price targets are still higher at $135-$150.
While I think ultimately Fusion will be the long term answer to humanity’s needs, for the next few years, Uranium and nuclear fission power is here to stay. To capitalize on this movement towards nuclear power, I would focus on these stocks.