Weekly Update: Nuclear Stocks Are Soaring
Good evening, and welcome to this week’s edition of Stealth Trades!
All eyes are on nuclear.
If you have been following my updates throughout the year, you know this has been one of my favorite sectors for months now.
I believe nuclear power is the future. My children will likely live to see this country powered primarily by nuclear energy.
The adoption cycle, as it often does, will start at the top – large, cash-rich tech companies will be the early movers and begin generating their own power.
Amazon and Google have both announced deals to do just that.
The trigger for these moves is, of course, the AI boom. Electricity is the major bottleneck for artificial intelligence. Massive data centers the size of 7-8 football fields require massive amounts of power. In most cases, more than the local power grid has to offer.
So, they have to create their own.
Tech companies lean waaaaaay left. Apple doesn’t even offer leather phone cases anymore. They use a vegan product called “FineWoven” that is probably made from tofu diversity. So the power has to come from a renewable source.
Oil, gas, and coal are all off the table. Wind won’t work. There isn’t enough surface area around the data centers for solar to be viable. And most of them aren’t built next to a dam, so hydro is out as well.
The only viable solution is nuclear. It is clean, renewable, efficient, and despite what Hollywood would have us believe – remarkably safe.
The adoption by big tech has spurred huge moves in the stocks of companies who manufacture the small modular reactors they will be using. NuScale Power (SMR), Oklo Inc (OKLO), and Nano Nuclear Energy (NNE) are all soaring.
Once Amazon and its peers have these plants up and running, others will follow suit. I then expect to see residential nuclear power begin to roll out in 5-10 years.
Nuclear stocks are currently in their hype phase. This is when we can see explosive moves of hundreds or even thousands of percent as FOMO pushes investors into the new hot sector.
Take SMR for example…
The stock tripled from September to October. Moves that big are almost always followed by deep pullbacks. But not this one…
It is consolidating in a tight 15% range – just like it did at the end of September. This is not the behavior of a stock that is about to crash. In fact, just the opposite.
Eventually this bubble will burst. These small and medium-sized nuclear stocks will fall back to fair value more in line with their fundamentals. But I’m going to enjoy the ride until that happens.
SMR, NNE and OKLO are the big three. Those are the ones I’m focusing on.
Keep an eye for breakouts from tight trading ranges on above-average volume. That is the trigger to jump in.
Best wishes for your trading,
