Money can be made from decommissioning
One of the biggest problems with nuclear power are clean-up costs, especially if things go wrong. When power plants need to be shut down they call on URS Corp (NYSE:URS) a world leader in decommissioning and hazardous waste disposal. Last year the company was part of a joint-venture that was awarded a 15 year contract to decommission the UK’s Sellafield site. As growth goes, URS Corp (NYSE:URS) is no Facebook Inc (NASDAQ:FB), the company’s earnings have expanded just 12.6% in the past five years and this slow growth rate is set to continue with Earnings Per Share (EPS) growth of 9.7% predicted for the next five years.
That said, as the company’s growth is slow, the valuation is low and URS Corp (NYSE:URS) trades at a 50% discount to its peers in the technical engineering sector which trade at an average TTM P/E of 21 compared to URS Corp (NYSE:URS)’ ratio of 11.8.
Both URS Corp (NYSE:URS) and Fluor Corporation (NEW) (NYSE:FLR) offer diversification and are not limited to their nuclear activities, giving investors a degree of diversification.
For a pure play on the sector, Cameco Corporation (USA) (NYSE:CCJ) could be a good bet.
The pure play
Cameco Corporation (USA) (NYSE:CCJ) is a miner and refiner of uranium, provider on nuclear consultation services and, through its 32% interest in Bruce Power L.P. generator and seller of nuclear power. Growth is slow as revenues have hardly moved in the past four years and margins have fallen but the company has a good hold on the niche uranium sector. Cash generation is strong and the company has reported positive cash inflows for the last three years, net debt is also low, coming in at only 20% of equity.
There is no denying that Cameco Corporation (USA) (NYSE:CCJ)’s lack of diversification makes the company high risk but it also means the company is most attractive when it comes to benefitting from the shift to nuclear power during the next few years.
Foolish summary
The outlook for nuclear energy is mixed but the rising demand for cheap, clean energy around the world will lead to increasing use on nuclear energy and these three companies above are set to benefit. The best choice would have to be Fluor Corporation (NEW) (NYSE:FLR) for its diversification. However, if you are pessimistic and believe that nuclear energy will fail and the cleanup will take years, URS Corp (NYSE:URS) could be the company for you.
Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool owns shares of Fluor. Rupert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Profit From Nuclear Energy With These Three Nuclear Experts originally appeared on Fool.com is written by Rupert Hargreaves.
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