WALL STREET WON’T INVEST IN NUCLEAR? THINK AGAIN
Friday, June 25th, 2010One of the perennial myths about why the Nuclear Renaissance can’t happen is that Wall Street will never invest. Nuclear is too expensive, building a reactor means “betting your company.”
Well the latest results from the stock ticker tell a different story.
“Utility Stocks Win in Desperate Chase for Yield,” is the top headline on “Behind the Money,” CNBC’s market evaluating website. “Utilities have long been valued for their steady dividend income with their holders often referred to as `widows and orphans.’ Now even hedge funds are putting on the black veil and buying the stocks as the reality of a low-return environment becomes apparent,” continues the report.
But that’s not the half of it. The top performers in the utility sector turn out to be – are you ready for this? – Southern Company, Exelon and Dominion Resources. “All three have dividend yields around 5 percent. These kinds of payouts means utilities are 35 percent undervalued relative to government bonds, notes Barclays.”
Southern is already doing site clearance at the Vogtle Plant in Georgia after receiving the first federal loan guarantee for new construction in May. Exelon is exclusively nuclear and has the nation’s largest fleet of reactors at eleven. Dominion has an early site permit for a third reactor at North Anna.
In fact one analyst specifically cites nuclear as the reason for Exelon’s appeal. “`Exelon’s five percent yield is not bad in this environment and plus its leveraged to the nuclear power growth story,’ says Patty Edwards, founder of Storehouse Partners and a ‘Fast Money’ contributor.”
Time to sell those Treasury bonds and start stocking up on nuclear power.