"Expanding nuclear energy is one way that we can actually [reduce] reliance on fossil fuels in a big way."
--
Patrick Moore, Co-Founder, Greenpeace

"There are 104 plants right now. We probably should have, as a nation, 200 or 250 plants. Now that's a long-term prospect."
-- Tom Farrel, CEO, Dominion Power

 

The Nuclear Revival

 

Dear Fellow Investor,

With the historic election now over, it's back to business in America.

That's means that along with the new administration, will come a renewed push for the "cap and trade" legislation embodied in the Climate Security Act.

That has once again put king coal back in the crosshairs, leaving nuclear power as one of the top answers to greenhouse gases.

Because the truth is without a big increase in the number of nuclear plants, the goals of cap and trade legislation are nothing but a fantasy.

That means big gains for the nuclear power industry as the push to revive the Climate Security Act unfolds.

In fact, cap and trade legislation is what candidate Obama was referring to when the news broke earlier that he was going to "bankrupt" the coal industry.

In an earlier interview, the President-elect told the San Francisco Chronicle:

"What I've said is that we would put a cap and trade system in place that is as aggressive, if not more aggressive, than anybody else's out there...

So if somebody wants to build a coal-powered plant, they can; it's just that it will bankrupt them because they're going to be charged a huge sum for all that greenhouse gas that's being emitted..."

That makes cap and trade an idea that now must be reckoned with -- perhaps as early as next spring.

And when the dust settles on this one, nuclear power will end up one of its biggest winners. After all, it is the only energy source today that can come close to replacing what will be lost as coal comes under attack.

But while most Americans spent the summer fixated on the cost of oil, America's "other energy crisis" went largely unnoticed by the thundering herd.

I'm talking about a potential future shortage of the domestic enriched uranium that will run all of those new plants. And unfortunately, it is a shortage that could put the U.S. at the mercy of imports again in the future... that is, unless we do something about it, at once.

You see, while everyone knows we're addicted to foreign oil, fewer of us are aware of this startling fact:

We currently import some 92% of the enriched uranium necessary to run our domestic nuclear plants.

It's a current danger that we can ill-afford... and Washington knows it!

What's more... The situation will get worse once a 20-year program with Russia called Megatons to Megawatts runs its course in 2013.

After that, all bets are off. We could be completely on our own, unable to meet our own needs.

That's where our "government-aided nuclear monopoly" enters the picture... and why its share price is set for an extraordinary run-up.

Because just like Freddie and Fannie, this is one monopoly that's too important to our security to fail.

According to the EIA's 2007 Uranium Marketing Annual Report:

The reality is, the government won't let it fail.

You see, without this former "government-sponsored enterprise," there would be no domestic producer of nuclear fuel. And that's simply unthinkable in today's world -- especially in a cap and trade environment.

And that is precisely why the U.S. government has every interest in aiding this nuclear power house... and why Uncle Sam is literally helping the company build the kinds of moats Warren Buffett would be proud of.

Plus, with America right now on the brink of a nuclear renaissance, this is one domestic monopoly squarely in the right place at the right time.

The nuclear tide is clearly turning... as the looming crises of energy and climate change force all of us to get sensible about nuclear.

Here's how it's all unfolding...

The Energy Crisis and the Nuclear Renaissance

Of course, we wouldn't be talking about this at all if it wasn't for the recent lessons we learned in the face of our most recent brush with the energy crisis.

That's because huge sums of money will be needed to fix the problems that sent the price of crude to the moon this summer. And needless to say, numerous industries will benefit from these massive expenditures -- like our nuclear monopoly, for instance.

In fact, the energy crisis has now gotten so serious that the International Energy Agency (IEA) estimates it'll take well over $22 trillion in spending -- worldwide -- to fix.

That's an inescapable truth -- no matter how low oil falls.

After all, when demand eventually rebounds -- as it will -- we will right back where we started.

Zogby Poll: 67% Favor Building New Nuclear Power Plants in U.S.

Survey finds Americans more likely to support a nuclear power plant in their own community than a coal, natural gas or oil plant.

That's a ton of dough... but the truth is that figure is probably just the beginning.

So, in reality, $22 trillion is just the starting point on a journey that could easily double before it's all said and done.

Those are the figures that have put alternative sources such as nuclear power on the uptrend while the alternative energy complex climbs higher across the boards.

Which is why I'm so bullish on nuclear power investments these days... and why you should be, too.

Take a look at nuclear's resurgence in this chart...

nuke power 3

And despite the long shadow cast by those cooling towers in Pennsylvania, nuclear power -- like it or not -- is in the throes of a dramatic comeback -- one that will only grow if cap and trade becomes law.

When that happens, it'll be a stunning reversal of fortune for an industry that had to fight tooth and nail just to survive over the last two decades.

Now consider this the next time you open your monthly power bill...

 

nuke power 4


The US Department of Energy reports nuclear power costs 1.72 cents per kilowatt-hour (including operations and maintenance costs).

Now compare that to:

· Coal at 2.37 cents per kilowatt-hour;

· Natural gas at 6.75 cents per kilowatt-hour; and

· Oil at 9.63 cents per kilowatt-hour

The numbers don't lie. Nuclear power is the cheapest and most reliable power source by far... day or night... windy or calm. Nuclear power delivers.

Nuclear's "Carbon-Free" Advantage

That's right. Aside from being cheap and reliable, nuclear energy is also carbon free. That makes the industry an even bigger winner if the Climate Security Act becomes law.

That's all part of the equation that has 17 companies preparing license applications for as many as 31 new U.S Reactors.

(And that's on top of the 15 construction and operating permits already under review by the US Nuclear Regulatory Commission.)

And while that doesn't exactly match the 112 new nuclear reactors that were built between 1957 and 1990, it is definitely the start of a trend... one that investors will soon catch wind of.

You see -- despite the recent pullback -- energy prices have simply gotten too high to stomach... and nuclear makes too much sense to ignore it.

Nuclear Energy Powers the World... and, Now, Your Portfolio

For investors, that means following a growth trend that is already firmly in place in the rest of the developing world.

It's no secret that while America allowed its nuclear industry to wither on the vine out of fear, the rest of the world moved forward.

While we dithered, everyone else kept building... and building... and building.

 

20080806 3quotes

 

In fact, according to the Nuclear Energy Institute, as of March 2008, 30 countries worldwide were operating 439 nuclear reactors for electricity generation. Additionally, 35 new nuclear plants are currently under construction in 14 countries.

Naturally, that includes numerous new plants in both China and India, where power demand is expected to nearly triple between now and 2030.

But no matter where all these new plants will be built, the majority of them will be fueled with enriched uranium... which will inevitably become...

The "End Product" of our Domestic Nuclear Monopoly

You see, when this single company begins to open up its new production facility in late 2009, it will hit the market at precisely the right moment.

Moreover, the U.S. government has basically set up the company with a protected U.S. market... by restricting cheaper foreign imports, largely from Europe. That includes a restriction on imports from Russia into 2020.

But make no mistake... While this company may be aided by the federal government, it's certainly no start up. To the contrary, it has an established foothold... with its roots going back to the beginnings of the U.S. nuclear power industry.

In fact, just last year this company supplied nearly 1/3 of the world's enriched uranium supply, fueling 150 reactors on 3 continents. All this while meeting over 50% of the U.S. supply.

But as I mentioned earlier, that feat was only possible using fuel from old Soviet warheads... and that program is rapidly coming to an end. Without the program, only 12% of our enriched uranium would come from domestic sources.

That has this particular company working feverishly on a plan to replace those resources before they run out for good -- one that will help the country rebuild its enrichment capacity before it's lost to foreign competition.

Now, understand this... The plant itself has been costly and subject to big cost overruns. And without explicit government backing, investors have been harder to find.

But with a $2 billion government loan guarantee likely on the way -- sooner rather than later -- the news itself will catapult shares of this vital company much higher... as investors begin to pour in on the announcement.

This One Could Be a Double as the News Crosses the Wire!

And here's the kicker...

The stock price is cheap. In fact, it's trading well below both its book value and its cash per share.

(But don't expect this key piece of the nuclear infrastructure to be on the bargain rack for long.)

Fundamentally and technically, it's forming an investment springboard that will send its share price on a long, long run.

The key, then, is catching it at the right time.

And that time is now.

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Your profit-hungry analyst,

steve sig

Steve Christ
Investment Director, The Wealth Advisory
Editor, Wealth Daily

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