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I took a lot of heat in the comments section when I wrote this recent article on solar stocks and why I felt they should go down. The main stock I wrote about in that article, written six weeks ago, was First Solar (FSLR). The stock market has gone straight up but shares of First Solar are about $30 down from then. People are passionate about their solar stocks, as evidenced by the flurry of comments.
And the reason they are passionate is because they want to take global warming as gospel and that anything that fights global warming (solar panels, for instance) should be invested in.
Some of the reader comments from that prior article:
"What an idiot and yellow journalist."
"That clown is a scam"
"Perhaps there are those who feel "social responsibility" and choosing industries that play a part in the betterment of the world as part of their investment philosophy"
In addition to the problems I mentioned in that article there's another problem, which I mention in this recent New York Post article: The world has been getting cooler since 1998 according to the UN Intergovernmental Panel on Climate Change. And this has been happening while carbon emissions have gone up 6%. "Well, what about the ice melting?" people ask me. According to NASA, the snow-ice cover of Antarctica has actually been increasing over the past several decades.
But OK, I've made my point. But that doesn't mean I think we should be polluting the Earth with more carbon emissions each year. In an ideal world, we find a clean technology that powers the Earth, reduces emissions, and reduces our dependence on oil from the Middle East. Further, the technology should be cheap. Part of the problem the solar industry has (as mentioned in the above article) is that the price of solar power is expensive.
The good news is, such a technology exists and is currently in use around the world. Nuclear energy. We all know the problems with nuclear energy: it has the word "nuclear" in it and people simply don't like that. But that aside, let's look at some of the benefits:
- Zero emissions
- Cheaper than solar, wind, oil, even natural gas.
- No nuclear accidents in the US since 1979. The technology has also gotten significantly safer since then which is why countries like France feel comfortable powering over 80% of their energy needs through nuclear.
- There's been a grand total of zero deaths in the US from the use of nuclear energy.
Two stocks worth looking at:
Cameco (CCJ)
Cameco is the world’s largest uranium producer accounting for 19% of world production. The company also just announced a joint venture with GE that will involve GE enriching uranium and CCJ will be the provider of the uranium. According to Yahoo Finance, earnings estimates for the current year have gone from $1.02 per share to $1.64 per share over the last 90 days. I expect the company to beat even these expectations because of a little side business they have while they are getting their uranium: they also mine gold and gold is hitting all-time highs.
American Ecology (ECOL)
American Ecology is the backdoor play into nuclear energy. Forget about all the politics involving whether or not we should build new nuclear reactors. These guys are the perfect play on cleaning up the waste that's generated by the reactors we currently have. Here's what I wrote in the above-mentioned New York Post article on ECOL:
"When it comes to getting rid of hazardous waste, nobody beats the 1952-founded company (long before people were spewing inconvenient truths) which disposes of radioactive waste. Trades for just nine times EBITDA with earnings expected to grow 20% over the next year. Huge barrier to entry (not everyone can start a company that cleans up uranium at nuclear facilities.) This company is like the Starbucks of radioactive garbage. The company has also entered into the business of recycling oil waste, making it a potential play on an increasing price in oil. Its eco-friendly, solves a major problem in the world, and you don't need to buy into the hype about global warming to make money off of this play."
Don't let the hype on global warming determine your investment decisions. There are good solid companies that one can bet on in the race for a cheaper, cleaner fuel. Nuclear could be for the 21st century what oil was for the 20th.
James Altucher is a managing partner of Formula Capital, an alternative asset-management firm, and an author on investment strategies.
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