MW If there's a nuclear renaissance, here are the stocks to watch, says UBS
By Steve Goldstein
Critical information for the U.S. trading day
It's a great morning for everything connected to China - not just Chinese stocks but also commodities, luxury-goods makers and the like - after a new monetary stimulus plan was announced in Beijing. More on that later.
There's genuine excitement in the air around nuclear power, heightened by Constellation Energy $(CEG)$ announcing it was restarting a nuclear reactor at Three Mile Island under a power-purchase agreement with Microsoft Corp. $(MSFT)$, and Monday's announcement from 14 institutions to finance a tripling of nuclear energy capacity by 2050.
Right on cue comes a report from UBS - interestingly, not one of the 14 institutions - arguing a faster nuclear rollout is possible. They say that not because of the tripling goal but because of simple demand, particularly for datacenters to support the growth of artificial intelligence.
It'll take some work - nuclear's share of global power generation slumped to 10% in 2021 from 17% in 1990, and much of that dwindling share is powered through aging reactors. Accidents, waste disposal concerns and, perhaps most importantly, costs, have all hampered nuclear output.
Construction times for new reactors also are an issue - a new reactor in Finland took 16 years to complete. But sentiment is changing. "The conversation around nuclear energy has, in a relatively (very) short space of time, completely reversed. We find it difficult to overstate the magnitude of the shift," says a new 81-page report from the Swiss bank, written by 44 analysts across multiple continents.
The UBS report says it's not just technology sector demand but also the backstopping from governments that can push nuclear forward. "We have long argued that complicated sustainability issues cannot be solved by the private or public sector in isolation; a coordinated approach is required. Is this a given? No, but neither are we inclined to rule it out completely," the report says. In China, where the government has given nuclear a push, nuclear's levelized cost of electricity is almost on par with other technologies.
UBS says its analysis is that nuclear capacity can grow at a 2.1% to 3% annual growth rate between now and 2030. That would require 1.8 times current uranium production levels by 2030, and 2.9 times by 2050.
That's music to the ears of uranium investors, and the UBS team also identifies companies in the supply chain. In North America, that list includes Emerson $(EMR)$, Flowserve $(FLS)$, Fluor $(FLR)$, NuScale $(SMR)$, Constellation Energy, Vistra $(VST)$, PSEG $(PEG)$ and Crane $(CR)$.
By company exposure to nuclear power, that list is topped by CGN Power (HK:1816), China National Nuclear Power (CN:601985), NuScale and Constellation Energy with 50% to 100% exposure to nuclear, and a 10% to 50% exposure grouping features Kepco (KR:052690), Centrica (UK:CNA), CEZ (CZ:CEZ), Fortum (FI:FORTUM), Public Service Enterprise and Vistra.
Besides costs and safety, another factor that could hamper nuclear would be the emergence of nuclear fusion. Companies investing in that potentially breakthrough technology include Eni (IT:ENI), Equinor (NO:EQNR) and Shell (UK:SHEL). "If and when it becomes commercially available, many current technologies, including existing nuclear reactors, could potentially become obsolete," they say.
The market
U.S. stock index futures (ES00) (NQ00) rose early Tuesday. Oil futures (CL00) surged on the China stimulus announcement.
Key asset performance Last 5d 1m YTD 1y S&P 500 5718.57 1.49% 1.65% 19.89% 33.81% Nasdaq Composite 17,974.27 2.17% 1.40% 19.74% 35.44% 10-year Treasury 3.795 13.60 -3.60 -8.59 -74.47 Gold 2653.6 1.67% 3.92% 28.08% 37.14% Oil 72.14 2.33% -6.51% 1.14% -19.74% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
China announced a package that includes interest-rate cuts, reduced reserve requirements and measures to boost the stock market, sending Chinese stocks higher and also boosting companies that sell to the second-largest economy including Tesla $(TSLA)$ and LVMH (FR:MC).
The latest U.S. house price measure from S&P/Case-Shiller is due at 9 a.m. Eastern, and consumer confidence data is due at 10 a.m.
Starbucks $(SBUX)$ was downgraded to underperform at Jefferies, as it says fiscal 2025 estimates from Wall Street are too high.
Liberty Broadband $(LBRDK)$ proposed a merger deal with Charter Communications $(CHTR)$.
Snowflake (SNOW) announced a $2 billion convertible bond offering, while Hawaiian Electric Industries $(HE)$ stock tumbled on an equity offering to help settle wildfire litigation.
Visa (V) is reportedly facing a U.S. Justice Department antitrust case on debit cards, according to Bloomberg News.
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The chart
This chart, from the blog Calculated Risk, shows that inbound container traffic at the key ports of Los Angeles and Long Beach, Calif. are booming - while outbound traffic is stagnant. "In general, it appears port traffic is returning to the pre-pandemic patterns - although this was a very strong August for imports as retailers prepare for holiday shopping - and possibly to beat any increase in tariffs," says the blog.
Top tickers
Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.
Ticker Security name TSLA Tesla NVDA Nvidia GME GameStop NIO Nio DJT Trump Media & Technology PLTR Palantir Technologies AAPL Apple HOLO MicroCloud Hologram TSM Taiwan Semiconductor Manufacturing BABA Alibaba
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-Steve Goldstein
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September 24, 2024 06:40 ET (10:40 GMT)
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