3 Nuclear Stocks That Radiate Profit
Karen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Lost in the daily drama of oil shortages and rising gasoline prices is the shadow world of nuclear energy. But with 433 nuclear reactors in operation worldwide and 65 more currently under construction, the use, if not the popularity, of nuclear energy continues to grow.
Since 1867, Babcock & Wilcox (NYSE: BWC) has been designing, constructing and managing energy-producing facilities. The company manufactures nuclear components for the U.S. military, constructs steam generating plants, commercial nuclear facilities and clean energy alternatives in addition to maintaining nuclear power plants. Babcock & Wilcox built the infamous Three Mile Island nuclear reactors that, under General Public Utilities and Metropolitan Edison Company ownership and operation, were responsible for the partial meltdown.
The stock has been caught in a $23.00 - $27.00 trading range since April this year, and closed today at $24.67. The company has cash of $362.32 million against $5.11 million of debt, and a market cap of $2.95 billion. Year over year revenue and net income continues to increase, with 2011’s annual revenue of $2.952 billion outpacing 2010’s $2.688 billion. Net income likewise rose to $169.6 million from $153.3 million, respectively. Analysts estimate 2013’s annual earnings at $3.72 billion and rate the stock as a buy.
Cameco’s (NYSE: CCJ) beta of 1.72 can give investors a wild ride. The company is a producer and supplier of uranium, and is actively engaged in the exploration, mining, refining and selling of uranium concentrate. Cameco also grows through acquisition and purchased BHP Billiton’s Australian uranium assets for $430 million this month.
The stock has a 52-week range of $16.59 - $26.45, and currently trades around $22.00. 2011’s annual income of $2.342 billion was higher than 2010’s $2.137 billion but net income decreased to $430.8 million in 2011 from $509.3 million in 2010. Cameco reported cash of $901.60 million and $999.89 million of debt. Analysts rate the company as a buy/outperform, and estimate 2013’s annual revenue at $2.62 billion.
Denison Mines (NYSEMKT: DNN) is a speculative play for investors who don’t mind taking risks. The mining company has explored, developed, mined and milled uranium since it was founded in 1996. Falling uranium prices was a primary reason the stock fell from a $14.00 high in 2007 to the current price of $1.00 - $2.00.
Denison Mines has a market cap of $542.37 million and a negative ROE of -16.65%. The company does have good cash to debt, coming in at $40.01 million against $295,000. Both revenue and net income decreased from 2010 to 2011, with revenue reported as $96.8 million, down from $128 million. The net loss increased from -$5.346 million in 2010 to -$70.869 million in 2011. Analysts rate the company as a hold and estimate 2013 revenue at $69.90 million. Rumors currently abound that Denison Mines may be taken over in the near future.
Analysts predict that uranium prices will be heading up over the next few years. The dismantling of Russian nuclear weapons, a lucrative source of uranium, ends in 2013, and with 100 new nuclear reactors being built over the next 10 years, uranium prices could very well return to their 2007 price of $140 per pound.
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