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A $295 Billion Opportunity Is Hiding In Plain Sight. 2 Stocks That Should Help You Plug Into It.
Last month, utility company Constellation Energy unveiled plans to restart one of the two now-mothballed nuclear reactors at Pennsylvania’s Three Mile Island power facility.
On the surface it doesn’t mean much. The world needs more electricity right now. Nuclear is a quickly accessible low-cost option.
There was a curious detail within Constellation’s press release, however. That is, although it will connect to the national power grid, the electricity it will generate is largely meant to power AI data centers managed by software giant Microsoft. The news underscores the fact that data centers are power-hungry, and increasingly so the bigger the business gets. Goldman Sachs believes data centers’ power consumption will grow 160% between now and 2030, yet will still just be getting started then.
The restart of Three Mile Island’s 800-megawatt reactor, however, is only a stopgap measure. The future of nuclear power is likely to be defined by so-called small modular reactors, which are precisely what they sound like … nuclear power plants that are easy to build and cost-effective to manage. Perhaps most notably, they can be put into action much close to where the electricity they generate is used, rather than delivering their electricity through the power grid.
Two particular companies stand ready to capitalize on this quickly gelling opportunity.
Small modular reactors are the real deal
This isn’t merely theoretical thinking either. Just within the past week Alphabet as well as Amazon announced intentions to purchase electricity generated by small modular reactors (or SMRs) to power their AI data centers. Industry research outfit Wood Mackenzie estimates the SMRs already under construction will eventually be able to produce over 22 gigawatts of electricity. That’s enough to power over 16 million homes or, presumably, at least a whole bunch of data centers.
Even before the first of these power plants becomes operational, though, more are apt to be lined up in anticipation of their success. IDTechEx reports the annual SMR market will be worth over $72 billion per year by 2033, en route to $295 billion in 2043. That’s an annualized growth rate of 30%.
It almost sounds too fantastical. If nothing else the complicated logistics of the SMR movement is a limiting factor.
There are many factors working in the small modular reactors’ favor, however, that are so much more powerful.
Chief among these factors are carbon-neutral power goals that are evolving into outright mandates. While nuclear power may have a dented reputation due to its fair share of catastrophic (or near-catastrophic) accidents, it does work and can be safe using more modern reactor designs and better-grounded standards.
Another driving force is the way and reasons energy is created and then utilized. Modular reactors are feasible for on-site energy creation at facilities like mines, refineries, and desalination plants, or even for generating the heat needed by smelters, many of which still burn coal.
SMRs are also particularly promising as a means of producing pure hydrogen, used in fuel cells to create clean electricity. The stumbling block is just the amount of raw energy needed to split water into its two atomic elements (hydrogen and oxygen) in the first place. With nuclear power, there’s plenty of clean energy to spare when splitting water molecules.
Two ways to play
So it’s a work in progress. The core opportunities are starting to gel, though. Two stand out among the rest.
First, with the creation and consumption of nuclear power set to grow for the foreseeable future, the world needs more nuclear fuel — predominantly uranium-238. BMO Capital Markets expects global consumption of uranium to grow by nearly 3% per year through 2035.
That’s not massive growth, but given that the supply-and-demand dynamic favors continued price increases, look for uranium prices to continue growing.
There’s a handful of publicly traded uranium miners like Uranium Energy (NYSEMKT: UEC) and Australia’s diversified mineral miner BHP Group Limited. But perhaps your best bet is a company called Cameco (NYSE: CCJ). It’s one of the world’s biggest suppliers of high-grade uranium, selling $2.6 billion worth of nuclear fuel last year, turning $339 million of it into net income thanks to its low-cost operation. It’s also sitting on nearly 500 million pounds worth of the material just waiting to be dug up.
Small modular reactors are of course the other major opportunity. Nano Nuclear Energy (NASDAQ: NNE) and Oklo (NYSE: OKLO) are a couple of SMR manufacturers perhaps worth putting on your radar. A company called NuScale Power (NYSE: SMR), however, is arguably further along than any other outfit on the monetization front.
This optimism wasn’t felt a year ago when Utah Associated Municipal Power Systems canceled its plans made with NuScale to establish what would have been the nation’s first SMR. It wasn’t quite the indictment of the idea it was being made out to be at the time though. NuScale is still working on nearly a dozen other small modular reactor projects — here and abroad — with undeterred partners.
The reward aligns with the risk
There’s risk here, to be sure.
Again, although nuclear power itself is well-proven, small modular reactors aren’t; would-be partners may be taking a “wait and see” approach, prolonging the adoption process. Moreover, while NuScale is the only company with an SMR design thet’s been approved by U.S. Nuclear Regulatory Commission for use in this country, this particular 50-megawatt reactor design isn’t the 77-megawatt version NuScale Power ultimately hopes to offer. Even if the new model is approved, that approval won’t come through until mid-2025, clouding the bullish argument.
Waiting for absolute certainty before stepping in, however, also leaves money on the table. The time to take your shot on less-than-fully gelled premises is before they become obvious opportunities. Once they’re obvious, much of any prospective gain is in the rearview mirror.
Of course, given the fluidity of the movement, we can’t rule out the possibility of a new name surfacing as an important nuclear power player either. Keep your eyes open to that possibility too.
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A $295 Billion Opportunity Is Hiding In Plain Sight. 2 Stocks That Should Help You Plug Into It. was originally published by The Motley Fool
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Nasdaq, S&P 500 sink as tech leads losses ahead of Tesla earnings
Sales of existing homes fell in September as house hunters remained on the fence about buying a home despite mortgage rates easing during the month.
Existing home sales slipped 1.0% from August’s tally to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marked the lowest rate since October 2010. Economists polled by Bloomberg expected a pace of 3.88 million in September.
On a yearly basis, sales of previously owned homes were 3.5% lower in September. The median home price rose 3.0% from last September to $404,500, marking the 15th consecutive month of annual price increases.
“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months,” NAR chief economist Lawrence Yun said in a press release.
There have been significant challenges that have weighed on sales activity, including a lack of inventory, escalating prices, and elevated mortgage rates. Last month, however, those factors turned around.
The Federal Reserve cut its benchmark rate by half a percentage point in September. While the central bank doesn’t set mortgage rates, its actions influence their direction of movement.
Mortgage rates hit the lowest level since February 2023 ahead of the Fed decision to ease, while listing inventory picked up.
But overall, that hasn’t been enough to entice buyers.
“Some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
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Tesla stock jumps on Q3 earnings beat
Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
Tesla shares were up nearly 8% in after hours trade.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” the company said in its earnings deck. “Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla (TSLA) announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
“Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve “slight growth” in 2024.
Ahead of Tesla’s Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
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Transak hit by data breach, 92K users exposed
Transak disclosed a data breach affecting over 92,000 users after a phishing attack compromised an employee’s laptop.
CryptoCurrency
The Dow plummets more than 600 points and is on track for its worst day in more than a month
The Dow Jones Industrial Average and other major indexes suffered a steep decline Wednesday afternoon as the yield on the benchmark 10-year U.S. Treasury note continued its upward climb, reaching 4.23%—a level not seen since July.
In the afternoon, the Dow dropped 631 points, or 1.4%, heading for its worst day in over a month. Meanwhile, the tech-heavy Nasdaq and the S&P 500 declined by 2.2% and 1.4%, respectively. However, there was some relief for investors as oil prices eased, with West Texas Intermediate (WTI) futures trading around $70.65 per barrel.
The Federal Reserve’s Beige Book, released in the afternoon, reported that economic activity remained largely unchanged across the 12 Federal Reserve Districts, with the Southeast significantly impacted by a harsh storm season.
On Wednesday, all eyes are on Tesla (TSLA) as the company prepares to release its latest earnings report. Analysts expect earnings per share to be 60 cents, down from 66 cents a year ago but an improvement from 52 cents in the previous quarter, according to FactSet estimates. Revenue is projected to hit $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion in the preceding quarter.
Apart from Tesla, investors are closely monitoring earnings reports from other major corporations, including AT&T (T), Boeing (BA), and Coca-Cola (KO).
McDonald’s stock plunges over 5%
McDonald’s (MCD) shares took a sharp hit, falling over 5% after the Centers for Disease Control and Prevention (CDC) linked the chain’s Quarter Pounder burgers to an E. coli outbreak. The outbreak has led to 10 hospitalizations and one death, driving a significant decline in McDonald’s stock during the afternoon trading session.
As of now, 49 cases have been reported across 10 states between Sept. 27 and Oct. 11, with a majority of illnesses occurring in Colorado, Nebraska, Utah, and Wyoming. The CDC noted that most of those affected had eaten a Quarter Pounder. Investigators are working swiftly to identify the contaminated ingredient.
Spirit Airlines stock soars 30%
After a failed attempt at merging with JetBlue (JBLU-0.80%), ultra-low-cost carrier Spirit Airlines (SAVE+28.01%) is reportedly turning back to a familiar partner. The Wall Street Journal (NWSA-0.34%), citing people familiar with the matter, reports that Spirit and Frontier Airlines (ULCC+3.05%) are in early talks over a potential merger. The news sent Spirit’s stock soaring nearly 30% on Wednesday.
–Francisco Velasquez and Rocio Fabbro contributed to the article
CryptoCurrency
Zanzibar’s new blockchain sandbox aims to drive tech startup growth
The semi-autonomous region of Tanzania is taking advantage of a sandbox regulatory framework adopted in July.
CryptoCurrency
Price analysis 10/23: BTC, ETH, BNB, SOL, XRP, DOGE, TON, ADA, AVAX, SHIB
Bitcoin’s correction ignited selling in altcoins, which are slipping below critical support levels.
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