A year ago when I attended a conference in New York, uranium mining companies were all the rage. The global mining giants were certainly getting more than their fair share of attention, but the real stars were the junior uranium exploration companies that are leveraged bets on the future of nuclear energy.

Last week I attended the same hard assets and commodities conference in New York. With oil and gold prices on the rise the past few months, it seems that risk appetite had shifted notably: The small gold and precious metals stocks were the stars of the show this year. I fielded comparatively few questions about nuclear power.

This is unfortunate. Uranium prices have continued to rise at a slow but steady pace since last May; prices are up from the low 30s per pound to comfortably more than $40. And uranium mining stocks have performed well--up more than 20 percent on average in the past year--though not quite as well as the oil services stocks.

Better still, on the fundamental front, news flow continues to support further expansion of nuclear power globally. In London this week, I noted considerable discussion on television and in the popular press concerning nuclear power. The nuclear power debate is getting coverage not only in the financial and newsworthy “broadsheet” papers but also in the tabloids. For the most part, the coverage was in favor of nuclear power; one poll showed more than 70 percent popular support for Britain maintaining, recertifying and expanding existing plants.

This is notable because, until recently, the UK had been planning to phase out its existing plants, accounting for roughly 20 percent of domestic power supply. Several existing plants had been scheduled for decommissioning during the next few years.

It seems there are two reasons for a shift in sentiment over the past few months. First, Britain is now in the same boat as the rest of Europe when it comes to natural gas supply. Supplies from the North Sea are no longer sufficient to meet demand, so the country has plans to import oil from Russia via Europe. Periodic disruptions to Russian gas supply caused havoc last year all over Europe; Britain is keen to avoid that problem.

Second, there’s an environmental factor. Specifically, the country is seeking to reduce carbon emissions, and several prominent scientists have stated clearly that nuclear power is the only viable means to reduce emissions.

While anecdotal, it appears that despite this positive performance, nuclear power plays have continued to garner less attention from the investing public than other energy stocks. And with the news flow in Europe, the US and Asia suggesting an expansion of the technology during the next few years, investors would do well to place some money in nuclear power investments rather than focusing solely on oil and gas plays.

© 2006 Elliott H. Gue
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