Momentum is building in the nuclear sector

Key points: 

• Stocks within the nuclear energy sector surged on the back of favorable news for the industry
• Trend scores for stocks within the nuclear ecosystem saw notable improvement last week
• Breakouts are primarily occurring in the uranium miners and nuclear technology groups

Are we witnessing the early stages of a cyclical upswing in nuclear energy stocks?

Last week, the Trump administration announced several executive orders aimed at supporting the nuclear energy sector, providing an additional catalyst for an industry that was experiencing a resurgence driven by the AI arms race. The stocks within the nuclear ecosystem exploded to the upside and are following through again today.

Capturing a thematic trend in nuclear energy can be approached through various direct and indirect investment methods. Today's report aims to assess the landscape through the lens of our trend score indicators. 

As shown in the table below, most breakouts are concentrated among uranium miners and nuclear technology firms, with limited participation from nuclear power plant operators. 

Direct Exposure (Pure-Play Nuclear) 

• Uranium Miners & Producers

Except for Necgen Energy (NXE), the other uranium miners triggered trend score net change signals. With notable improvement in trend and relative trend scores, the group could be shifting into a more constructive uptrend phase. 

Cameco (CCJ), the top uranium miner by market cap, has rallied sharply since triggering a trend score net change signal and is on the cusp of a trend score buy signal should the trend composite rise one more point. 

• Nuclear Technology / Services/ SMR Developers/Fuel Cycle & Processing

Companies across the nuclear technology spectrum, including those focused on small modular reactors and uranium enrichment, are exhibiting some of the highest trend scores among all stocks in the nuclear sector. 

NuScale Power (SMR), a developer of small modular reactors, has broken out to a new all-time high, with both its trend and relative trend maintaining bullish scores of nine.

• Nuclear Plant Operators and Renewable Energy Specialists

Although less glamorous than uranium miners and nuclear tech firms, the steady utility companies, historically favored for their safety and attractive dividend yields, have recently drawn investor interest due to the rising energy demand, particularly driven by the arms race in artificial intelligence.

Several companies, including Constellation Energy, Vistra, and NRG Energy, exhibit bullish trend scores. 

On Friday, Constellation Energy (CEG) triggered a trend score buy signal when both composites displayed a reading of eight or higher, and the stock registered a 2-month absolute and relative high.

Vistra Corp (VST) also generated a trend score signal on Friday when its composites aligned at eight or higher, and it recorded a 2-month absolute and relative high. 

ETFs & Thematic Funds

• Nuclear & Uranium Focused ETFs

The most accessible and risk-averse way to participate in the nuclear sector would be through an ETF allocation. 

The Global X Uranium ETF (URA) provides investors with exposure to a diverse range of companies involved in uranium mining and the production of nuclear components. Trend scores for this ETF have almost reached the threshold level for a signal.

Although the Sprott Uranium Miners ETF has shown improvement, its scores still lag behind those of the Global X ETF. It's essential to examine the underlying holdings of any ETF, as individual weightings can significantly influence performance.

With a trend score of seven, the VanEck Uranium and Nuclear ETF is approaching the buy signal threshold. Notably, it has already broken out to a new high, a feat the other two have yet to achieve, although the Global X ETF is close. 

I would also point out that the VanEck ETF offers a more evenly distributed allocation across its holdings, in contrast to the other two ETFs, which are heavily concentrated in Cameco. For this reason, if I were to choose among them, the VanEck fund would be my preferred option. 

What the research tells us...

The nuclear energy sector should be on every investor's watch list, as it continues to gain momentum on the back of favorable executive orders put in place by the Trump administration, aimed at revitalizing domestic nuclear capabilities. This policy tailwind, coupled with growing energy demands resulting from advancements in artificial intelligence, could set the stage for a cyclical upswing. With the stocks surging over the last few days, trend scores are improving and, in some cases, triggering buy signals. While the sector presents compelling potential, it remains a volatile area that requires disciplined risk management. For investors seeking exposure with less individual stock risk, a diversified ETF focused on nuclear energy may offer a more measured way to participate in the sector's upside.