6 global stocks to play the rising focus on nuclear power, according to Jefferies

Published Mon, Feb 14 202211:19 PM EST

While renewables such as wind and solar have been seen as the long term future of a low-carbon energy sector, Jefferies thinks nuclear power could be a more immediate alternative, naming six buy-rated stocks that it thinks will benefit from Europe's "nuclear revival." The investment bank said nuclear power is emerging as a solution to Europe's multiple and concurrent energy priorities, which include decarbonization, coal phaseout, reduced dependence on foreign sources of natural gas and energy security, the bank's analyst Luke Sussams said in a research note on Feb. 8. The bank noted that Europe is going through an energy price crisis that it thinks could last several years, while tackling inflationary pressures wrought by rising energy prices — all while trying to align its economy with some of the most ambitious climate targets in the world. With nuclear power "coming back into favour," the bank believes new projects should create investment opportunities across the value chain. Small modular reactors — which are smaller than conventional nuclear reactors — is an attractive addition to Europe's low carbon power generation, he added. "We see the development of SMRs as best placed to provide a baseload power source which underpins intermittent renewable generation. Their size and modularity offer lower initial capital outlays and quicker deployment as compared to traditional large-scale reactors," Sussams said. Stock picks With several new nuclear plants set to be approved across Europe, the bank said investors can play this growth story by investing in companies currently involved in Europe's nuclear projects. These companies could also be in a strong position to win contracts from future projects, Sussams said. Within the U.K, the bank likes Bouygues , EDF , Rolls-Royce , Siemens and Vallourec for their active role in the Hinkley Point C nuclear power plant in Somerset, southwest England. These companies could be best positioned to participate in the future of nuclear power in the U.K. and Europe, Sussams said. In addition, Bouygues is also part of a consortium of companies that won the civil works contract for the Flamanville 3 nuclear plant project in Normandy, France. The bank also likes Alstom , which is the supplier of steam turbines for the plant. Siemens also supplies turbines and generators for the Olkiluoto 3 nuclear plant in Finland — set to be Europe's largest nuclear reactor. Meanwhile, Rolls-Royce and EDF are active in the SMRs space in the U.K. and France, respectively, Sussams said.

A picture taken on April 25, 2016, shows the two cooling towers of the nuclear power plant of Civaux, seen behind a colza field, in Civaux, central France

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