JBL: Going Nuclear

The market is concerned about inflation. However, there is a difference between now and the 1970s. In the '70s, commodities had a run, but so did wages, stoking inflation in a huge way. Now the commodities are having a terrific run, but with the globalization of the world's labor market, we still have low labor-market prices.

This, in my opinion, will allow commodities to be bullish, without igniting the Fed's inflation alarm. Though I feel inflation has and will creep into the market to a degree, I do not believe we are seeing a repeat of past cycles.

A commodity bull market presents several buying opportunities. You can buy stocks or commodities that are participating, or you can buy stocks in companies that will benefit from rising commodity prices.

One dormant technology that finally shows signs of life in the U.S. is nuclear technology. China has stated that it will build 40 new nuclear power plants, Japan 13 and even Turkey three. France already gets 78% of its electricity from nuclear energy. The U.S. is about to get on board the nuclear train.

In an attempt to encourage nuclear plants, Congress included a risk-insurance provision in its 2005 Energy Policy Act. The provision will cover $500 million in delays for the first two nuclear reactors built, and $250 million for the next four. The federal energy bill also provided billions of dollars in subsidies, tax breaks and incentives.

My pick in nuclear technology is Exelon (EXC), America's largest and most profitable nuclear power-plant operator. Exelon is also going to become the world's second-largest after this summer's acquisition is complete with New Jersey-based PSE&G (PEG).

Once combined with PSE&G, Exelon will have an estimated $27 billion in revenue, with an estimated $3.2 billion in net income in 2006. Analysts estimate further 30% growth in 2007.