Nuclear Energy Trading: How to Trade Nuclear Energy Stocks

Plus500

Wednesday 20 November 2024

Nuclear energy has been a crucial part of the global energy market for over 80 years, so it’s far from a new concept. However, in recent months, the growing prominence of artificial intelligence (AI) has sparked renewed interest in nuclear energy, especially among market participants, traders, and those seeking to diversify their portfolios with energy commodities and stocks.

So, what exactly is nuclear energy? Why is it so important, how can it play a role in diversifying trading strategies, and how does it relate to AI? Let’s find out:

What Is Nuclear Energy?

Nuclear energy is the energy released from an atom’s core (the nucleus). It can be generated in two main ways: nuclear fusion, where atomic nuclei combine to form a heavier nucleus, or nuclear fission, where a nucleus splits into smaller parts. Both processes release significant amounts of energy, primarily in the form of heat, and involve subatomic particles such as neutrons and protons. (Source: IAEA)

The History of Nuclear Energy (A Timeline)

A series of events have occurred throughout history, contributing to the development of nuclear energy as we know it today. Here’s a brief timeline:

1895 to 1945: Atomic radiation was discovered and studied, leading to the understanding of nuclear energy.
1939-1945: The atomic bomb was developed, with the bombings of Hiroshima and Nagasaki in 1945 demonstrating its devastating power.
1945: Nuclear energy began to be explored as a potential source of electricity.
1956: The first nuclear power stations were developed to generate electricity.
2024: The nuclear energy industry is evolving with advancements in small modular reactors, next-generation technologies, a focus on clean energy, workforce development, and increasing public and regulatory support. Additionally, major tech companies like Google use nuclear energy to power artificial intelligence, which demands significant amounts of energy that can be both costly and environmentally harmful.

The Uses of Nuclear Energy

Nuclear energy is highly versatile and serves a range of applications, with its primary uses including:

Medicine: It is essential in the medical field, particularly for producing isotopes used in diagnostic imaging and radiation therapies for treating cancer and other health conditions.
Agriculture: It is employed in agriculture to improve crop yields, control pests, and preserve food. For example, irradiation can be used to sterilise food and prevent spoilage while also helping to control harmful insect populations.
Space: It provides a reliable energy source for spacecraft, especially on missions that venture far from the Sun, where solar energy is insufficient. This energy is crucial for running spacecraft systems and supporting scientific instruments on long-duration missions.
Water: It can produce heat and power for desalination plants, which transform seawater into fresh, drinkable water. This is particularly valuable in regions with limited access to natural freshwater resources.
Other Uses: Nuclear technology is also applied in various industrial processes, including sterilising medical equipment and treating wastewater. It is also used in research to test materials and improve manufacturing processes.

Investing in Nuclear Energy: The Rising Interest in Nuclear Energy in 2024

The rising interest in nuclear energy in recent years is due, in part, to the AI boom, as it has become a key part of the global drive for energy security and decarbonisation.

With governments and businesses recognising its role in reducing carbon emissions and meeting rising energy demands, nuclear power is gaining renewed support.

This shift is driving increased investment in both traditional nuclear plants and new, advanced reactor technologies.

Moreover, political support for nuclear energy is growing, and many countries are now looking to expand their nuclear capacity as part of their clean energy strategies.

Furthermore, public opinion is becoming more favourable towards nuclear as a reliable, low-carbon solution to the energy crisis. As a result, nuclear energy is poised to play a larger role in the global energy mix in the years ahead, contributing significantly to a more sustainable future. (Source: Reuters)

Nuclear Energy Trading

Given the rise in demand for nuclear energy, many traders and investors may be seeking ways to potentially capitalise on this field. This can be done through trading and investing in nuclear energy stocks or through ETFs.

Top Nuclear Energy Stocks

Nuclear energy stocks are publicly traded companies' shares in developing or generating nuclear energy. Some of the top nuclear energy stocks include the following:

Cameco (CCJ): A uranium company formed in 1988 and based in Saskatoon, Saskatchewan, Canada.
Brookfield Renewable (BAM): A renewable power and decarbonisation solutions company founded in 2011 and headquartered in Toronto, Ontario, Canada.
Duke Energy (DUK): A natural gas and electric power company founded in 1904 and based in Duke Energy Plaza Charlotte, North Carolina, USA.
NextEra Energy (NEE): A clean energy company established in 1984 and headquartered in Juno Beach, Florida, USA.

Top Nuclear Energy ETFs

Exchange-traded funds (ETFs) are a basket of securities that track a group of investments like stocks, commodities and more. Nuclear energy can be traded through ETFs involving nuclear energy stocks, such as the following:

Global X Uranium ETF (URA): This fund offers exposure to companies related to or involved in the production of nuclear components or the mining of uranium.
VanEck Uranium and Nuclear ETF (NLR): Closely tracks the price and yield performance of the Global Uranium & Nuclear Energy Index excluding fees and expenses.
Range Nuclear Renaissance Index ETF (NUKZ): This ETF mirrors the growth and performance of the companies that produce or engage in nuclear fuel and energy.

Trading Nuclear Energy CFDs

While investing directly in ETFs and stocks can be an option, for traders seeking leveraged access to these assets without needing to own them, Plus500’s Share and ETF Contracts for Difference (CFDs) may be suitable. CFDs offer a way to speculate on price movements of the underlying without actually owning it. This trading method is particularly unique due to leverage, which enables traders to control positions larger than their initial investment. However, while leverage can amplify potential gains, it also significantly increases the risk of larger losses.

To learn more about CFDs, read our article and watch our video titled “What Is CFD Trading.”

Conclusion

In conclusion, nuclear energy is seeing a revival, driven by its ability to meet growing energy demands and reduce carbon emissions.

With technological advancements and increased political and public support, nuclear power is becoming a key part of the clean energy transition.

This shift presents new trading opportunities from stocks to ETFs, making it an attractive option for diversifying portfolios.

While the future is yet to be determined, nuclear energy is largely expected to play a larger role in the global energy mix as the world moves toward sustainability.