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7 Stocks to Benefit From Nuclear Shortage

BOSTON (TheStreet) -- The nuclear meltdown in Japan is prompting the world to reassess its reliance on nuclear energy.

"One thing is certain: Events in Japan will have a profound effect on the nuclear power industry in the U.S. and throughout the world for some time to come," said Standard & Poor's in a March 16 research note.

Nuclear energy provided 13.5% of the world's electricity in 2008, and it has grown rapidly since then, according to the International Energy Agency. So it would take a huge shift in the world's energy-producing industry if governments decide nuclear power isn't worth the risk.

North America's electricity is generated primarily from three resources: coal, at 45%, nuclear energy, 24%, and natural gas, 19%.

Natural gas and coal producers are expected to see a spike in demand to fill the gap for lost nuclear-generated electricity capacity, while alternative energy sources, such as solar and wind, are likely to gain new supporters.

Share prices throughout the energy industry have gone haywire over the past week with the huge, diversified utilities sector, which includes electricity producers that have coal and nuclear-energy generation plants, losing 2%, while the small $15.5 billion solar energy industry gained 8.6%.

The S&P 500 Index lost 1.6% over the week ending March 17 and is up only 1.7% this year. The benchmark index has dropped about 5% in the past month.

For now, the long-anticipated "nuclear renaissance" looks like it's on hold. Gary Anderson, co-manager of the $7.6 billion Scout International Fund (UMBWX), said in an interview Friday he expects new construction or expansion of nuclear plants will be postponed for at least six months to a year, as governments and the industry reexamine safety concerns and refines plans for new plants.

The result will require significant new investments and much higher operating costs.

But Anderson is confident nuclear energy will make a comeback. "Modern civilization needs clean, reliable energy, and nuclear energy provides that and is the energy of the future."

Travis Miller, head analyst of the utilities sector at Morningstar, agrees. He said Thursday that "nuclear power will still be a significant energy source in the U.S. for the foreseeable future."

In the interim, there's a worldwide scramble for sources of energy to fill the gap caused by the loss, or reduction, in nuclear-power capacity.

Here's a review, on the following pages, of four nuclear-industry companies that face immediate challenges, but could rebound when governments come to terms with nuclear power, as well as three that are leading producers of energy resources seeing renewed investor interest.

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