2 Nuclear Energy Stocks to Buy in February

Cameco and Centrus Energy stand to benefit from a renewed push for nuclear capacity and tightening uranium supplies following geopolitical disruptions: Cameco, a major North American uranium producer with high-grade assets (MacArthur River, Cigar Lake) and a 49% stake in Westinghouse, has seen its stock rise ~395% since the start of 2023. Policy drivers include the May 2024 Prohibiting Russian Uranium Imports Act (waivers expire Jan. 1, 2028) and a U.S. government commitment tied to an $80 billion reactor build agreement; Centrus won a $900 million DOE task order to expand enrichment at Piketon and is the only NRC-licensed HALEU producer. Both names trade at elevated multiples (projected 2026 P/E ~74x for Cameco and ~66x for Centrus), implying high upside if the nuclear buildout proceeds but significant valuation-driven volatility risk.

Analysis

Market structure: Domestic enrichment (LEU/HALEU) providers and high‑grade miners (Cameco/CCJ, Centrus/LEU) are primary beneficiaries as U.S. policy (waiver expiry 1/1/2028) and $80B reactor commitments force utilities to onshore supply chains. Expect a re‑pricing: long‑term contracting and inventory restocking will raise term prices and give pricing power to low‑cost/high‑grade producers; marginal higher‑cost miners and Russian suppliers (TENEX) lose share. Cross‑asset: higher uranium prices lift miners and related equity volatility, pressure credit spreads for capex‑heavy projects, and may strengthen CAD vs USD if Canadian exports rise; expect higher implied vols on CCJ/LEU options around DOE and waiver milestones.

Risk assessment: Tail risks include a geopolitical reconciliation restoring Russian supply (sharp downside), a nuclear incident or major permit delay (regulatory reversal), or technical failure at Piketon/Cigar Lake (operational). Timeframes split: immediate (days) — momentum and option IV moves around headlines; short (3–12 months) — DOE funding drawdowns and contract awards; long (3–10 years) — reactor builds and structural supply deficits. Hidden dependencies: HALEU ramp requires specialized logistics and NRC licensing; bottlenecks in conversion/refining could create multi‑year supply shocks independent of mine output.

Trade implications: Direct plays favor asymmetric, time‑staggered exposure — buy long‑dated LEAPS to capture multi‑year structural upside while selling short‑dated calls to finance carry; use put spreads to cap downside. Pair trades: favor high‑quality, cash‑flowing CCJ vs speculative small‑cap miners/ETFs; volatility plays around DOE milestones with calendar spreads. Entry/exit: add on >15% pullbacks or on confirmed DOE milestone within 90 days; trim if uranium spot falls >25% or valuation >100x forward earnings.

Contrarian angles: Consensus underestimates lead times — HALEU/mining ramps take 3–7 years, meaning prices could spike before supply responds; conversely current rallies (CCJ +395% since 2023) embed long‑dated policy certainty that could be reversed by political shifts. Historical parallel: commodity re‑nationalization cycles (oil/rare earths) show policy support often produces multi‑year structural winners but with 40–60% episodic drawdowns. Unintended consequence: aggressive onshoring may inflate nuclear capex, crowding fiscal capacity and raising interest‑rate sensitivity for projects and utilities.

Key Decisions for Investors

• Establish a 2% portfolio position long CCJ via 18–30 month LEAPS (buy-to-open) and fund by selling 3-month covered calls equal to ~50% of premium; add another 1% on a >15% price pullback or on confirmed DOE contract drawdown within 90 days. Trim to breakeven if spot uranium drops >25% or if CCJ forward P/E >100x.
• Establish a 1–1.5% portfolio position long LEU using 18-month call spreads (buy LEAPS, sell higher strike LEAPS) to limit cash outlay and target upside from Piketon commissioning; add 0.5% if DOE delivers first tranche within 120 days. Exit/trim if DOE funding is delayed >180 days or HALEU production slips beyond 2028.
• Implement downside protection: buy 6–12 month put spreads on CCJ/LEU sized to cover 0.5–1% of portfolio (cost‑capped) when net long exposure ≥3%, and sell protection if option IV falls below historical 30% implied threshold.
• Execute a relative‑value pair: long CCJ (1.5%) vs short URA ETF (1.0%) over 6–12 months to capture outperformance of high‑grade, low‑cost supply vs diversified miners; unwind if CCJ underperforms URA by >20% or if uranium spot strength is broad and persistent (>+50% from today).