The future of nuclear energy stocks in a net-zero world

Nuclear energy stocks in brief

Nuclear energy stocks are shares in companies involved in the lifecycle of nuclear power. They include businesses mining uranium - the primary fuel used in nuclear reactors - which are highly impacted by commodity pricing. The sector also encompasses reactor manufacturers, who undertake some of the most complex engineering in the world, and nuclear power plant operators, who generate consistent revenue by selling energy but face high levels of regulation and operational costs.

The sector is perhaps divisive from an environmental, social, and governance (ESG) perspective. While nuclear energy is considered crucial for achieving a net-zero world due to its ability to provide a steady energy supply with minimal greenhouse gas emissions, the radioactive waste it produces can last for millions of years. Disasters like Chernobyl and Fukushima have contributed to public distrust, despite advancements in safety.

Advantages and drawbacks of nuclear energy stocks

• Consistent and reliable source of energy

On the plus side, nuclear power provides a consistent and reliable source of energy, making it a reasonable complement to renewable sources like wind and solar. This can also make the sector attractive to income investors.

• Nuclear energy is green

Despite the associated radioactive waste, nuclear energy produces significantly fewer greenhouse gas emissions compared to fossil fuels like oil, coal or gas.

• Government support

The sector is also increasingly seeing better government support, especially as hydrocarbons are expected to run low over the next few decades. This all makes for a high growth sector - which also means increased technological advancements - for example, in small modular nuclear reactors.

• High costs and long timelines

Constructing a uranium mine or a nuclear power plant is usually very expensive, and very time-consuming. Construction can cost billions of dollars, and it often takes over a decade to go from first spade to operational. This can represent a significant risk, especially as uranium prices and government policies fluctuate. Investors are often also wary of the costs associated with decommissioning mines or plants, especially as they come closer to the end of their useful life.

• Safety and public perception challenges

Particularly regarding the disposal of nuclear waste, which remains hazardous for thousands of years. An entire branch of symbolism, known as nuclear semiotics, is dedicated to creating long-term warning messages to deter human intrusion at nuclear waste repositories.

Overall though, all energy sources have their own negatives, and nuclear appears to sport fewer downsides than most.

Top nuclear energy stocks to watch

The following are the ten largest holdings of the VanEck Uranium and Nuclear Technologies Undertakings for Collective Investment in Transferable Securities (UCITS) exchange-traded fund (ETF) as of March 2025. These are not recommendations but are some of the most popular stocks in the sector. Given the high capital costs associated with nuclear, many of these companies are market titans also diversified into other sectors.

Cameco (NYSE: CCJ)

Cameco is one of the world's largest uranium producers, operating significant mines in Canada and Kazakhstan with a focus on sustainable and safe mining practices. Its uranium supplies fuel for nuclear power plants globally, and the company has seen significantly increased demand due to the global shift towards clean energy and the resurgence of nuclear power.

Cameco’s key advantage lies in its extensive high-grade uranium reserves, positioning it well to meet rising demand. However, the company faces challenges from fluctuating uranium prices and geopolitical risks associated with its Kazakhstan locations.

BWX Technologies (NYSE: BWXT)

BWX Technologies specialises in designing nuclear components and power generation systems, primarily for the United States (US) government, including the Navy's nuclear propulsion systems. The company also provides nuclear fuel and services for reactors and medical isotopes.

The business enjoys a strong economic moat due to its unique position as a key supplier of nuclear technology to the US government, ensuring a reliable revenue stream. However, reliance on government contracts may pose risks if federal budgets shift under an unpredictable administration.

NexGen Energy (NYSE: NXE)

NexGen Energy is a Canadian company focused on the exploration and development of uranium projects, particularly in the Athabasca Basin, which is widely regarded as one of the best uranium addresses in the world. The company's flagship project, Rook I, is considered one of the largest undeveloped uranium deposits globally.

NexGen’s high-quality uranium assets could position it as a significant supplier in the nuclear energy market. However, as a company still in the development phase, there are typical operational and financial risks.

Samsung C&T (KRX: 028260)

Samsung C&T operates in multiple sectors, including engineering, construction, trading, investment, fashion, and resorts. The company has been involved in significant infrastructure projects worldwide and is expanding its renewable energy projects in line with global sustainability trends.

Its diversified business portfolio spreads risk across industries and provides various revenue streams, although underperformance in one sector could impact overall profitability and strain management resources.

IHI (TSE: 7013)

IHI is a Japanese engineering company engaged in aerospace, energy, industrial machinery, and infrastructure. It has recently focused on renewable energy solutions, such as offshore wind turbines, and developing nuclear fuel cycle systems.

IHI enjoys broad engineering expertise, allowing it to participate in diverse high-tech projects and adapt quickly to market demands. However, intense competition pressures profit margins and requires continuous innovation, a costly endeavour.

AtkinsRealis Group (TSX: ATRL)

AtkinsRealis Group, formerly SNC-Lavalin, is a Canada-based engineering and construction services company. The rebranding to AtkinsRealis reflects a strategic shift to integrate its acquired Atkins business and strengthen its global presence.

The firm has a strong presence in infrastructure and engineering sectors worldwide, offering comprehensive services across project lifecycles. However, past legal issues have tarnished its reputation, creating challenges in securing new contracts and necessitating efforts to rebuild trust with clients and shareholders.

Jacobs Solutions (NYSE: J)

Jacobs Solutions is a US technical professional services firm offering engineering, technical, professional and construction services. The company has expanded through strategic acquisitions, including a merger with CH2M Hill and the acquisition of Wood Nuclear. In 2024, Jacobs spun off its Critical Mission Solutions and Cyber and Intelligence Government Services businesses, which merged with Amentum to create a new company.

Jacobs enjoys a global footprint and caters to various industries and government sectors. However, the complexity of managing its vast portfolio has occasionally seen operational challenges.

Hitachi (TSE: 6501)

Hitachi is a Japanese multinational with operations spanning information technology, energy, industry, mobility, and smart life sectors. The company has undergone a significant transformation over the past few years, emerging as a leading provider of industrial software and hardware, benefiting from the rising demand for green energy.

Hitachi focuses on data monetisation and industrial artificial intelligence (AI), positioning itself as a significant player in Japan's tech transformation. However, challenges persist with expansion abroad and cost inflation at its engineering projects, requiring strategic management to sustain growth.

Oklo (NYSE: OKLO)

Oklo specialises in the development of small modular reactors (SMRs) for nuclear energy production. The company has attracted significant investments from tech giants like Amazon and Alphabet and is at the forefront of this developing sector alongside companies like Rolls-Royce.

Oklo is known for its innovative approach to nuclear energy, offering safer and more cost-effective solutions compared to traditional reactors. However, it faces regulatory hurdles and public perception challenges as a pioneer in this field.

Mitsubishi Heavy Industries (TSE: 7011)

Mitsubishi Heavy Industries (MHI) is a Japanese multinational engineering and manufacturing company with segments across aerospace, defense, energy, shipbuilding, and industrial machinery. The company plays a key role in Japan's defense sector and is a major producer of gas turbines and power systems.

Recently, MHI has been expanding its role in carbon capture and hydrogen technologies, aligning with Japan's decarbonisation goals. However, the company faces challenges from global economic fluctuations and supply chain disruptions, which can impact its large-scale projects.

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