8 Nuclear Stocks With Upside

NEW YORK (TheStreet) -- Uranium Resources (URRE), Ur-Energy (URG), Uranerz Energy (URZ), Denison Mines (DNN), Hitachi (HIT), General Electric (GE), USEC (USU), and Fluor (FLR) are nuclear stocks with potential upside of up to 148%, calculated on analysts' average 12-month price targets.

The tremendous pressure on fossil fuels worldwide improves the prospects of nuclear energy as a critically important source of electricity generation. Nuclear energy supplies 16% of the world's electricity and meets up to 20% of U.S. electricity demand. According to the World Nuclear Association, nuclear reactor count stood at 544, including under-construction, planned and proposed reactors.

We have identified stocks that could benefit from growing emphasis on clean energy. However, these stocks corrected in the aftermath of the nuclear crisis in Japan and lost an average 7% during the last one week. Nonetheless, considering growing power demand from developing economies, these stocks have potential to deliver attractive returns in the long term. Analysts' consensus estimate indicates 10%-147% upside for these stocks over the next one year.

8. Fluor ( FLR), together with subsidiaries, is a professional services firm operating in myriad business segments including power.

Fluor has expertise in engineering, procurement, construction, and maintenance of nuclear facilities, and provides services for incorporation of nuclear licensing requirements and risk management in the setup of a new nuclear reactor.

Fluor is an active member in the commercial nuclear market executing more than 80 million work hours at 60 U.S. nuclear units in capital work, engineering and technical services, and refueling outage support. The company has more than 9,000 experienced nuclear professionals and constructed 9 nuclear projects.

Analysts polled by Bloomberg give the stock 57% buy ratings. The stock appreciated 54% during the last one year and currently trades at 22 times its estimated 2011 earnings.

7. General Electric ( GE) is a diversified advanced technology and services company.

In the past 50 years, GE designed and supplied nine generations of boiling water reactor technology. In fact, GE has designed around 75 of the 92 boiling water reactors operating worldwide. The company designs and supplies nuclear reactors through its partnership interest in GE-Hitachi Nuclear Energy and other related companies.

GE's other subsidiaries supply products and services including steam turbines, sensors, water treatment services to the nuclear power business.

For fourth quarter of 2010, earnings increased to $3.9 billion, up 33% compared to the same quarter in 2009. Net revenue improved to $41.4 billion for the quarter on the back of robust performance delivered from its industrial and infrastructure subsidiaries.

Based on consensus estimates, the stock is expected to deliver 16% in a year's time, and is currently trading at 14.8 times its estimated 2011 earnings.

6. USEC ( USU), together with its subsidiaries, supplies low enriched uranium to commercial nuclear power plants in the U.S. and internationally. Overall, USEC supplies to 150 nuclear reactors worldwide.

Net revenue rose 43% year-over-year to $666 million during 2010 fourth quarter. For full-year 2010, revenue was reported at $2.04 billion. Net income stood at $9 million, compared to $49.5 million for fourth quarter of 2009. Net income numbers for 2009 inflated on the receipt of approximately $70 million related to a trade case settlement with Eurodif.

The company expects total revenue of $1.7 billion for 2011, anticipating a 10% decline in separative work units (SWU) sales volume. The management indicates that revenue from contract services could decline significantly because of the transition to a new decontamination and decommissioning contractor at the Portsmouth site. Higher cost of sales from preceding quarters in the SWU inventory would continue to compress gross profit margins to an expected range of 4% to 5%.

Analysts expect the stock to deliver 25% returns in the next one year. The stock is trading at 26 times its estimated 2012 earnings.

5. Denison Mines ( DNN) is an intermediate uranium producer. The company has projects in the U.S. and several development projects in Canada, Zambia, and Mongolia. Denison has 100% ownership in White Mesa mill in Utah and a 22.5% stake in McClean Lake mill in Saskatchewan.

The company also co-mines vanadium from some of its mines in Colorado and Utah. Denison's 2010 production was 1.4 million pounds U3O8 (Triuranium Octoxide)--a compound of uranium--and 2.3 million pounds of vanadium. Production for 2011 is estimated at 1.2 million pounds of U3O8 and 2.2 million pounds of vanadium.

Net revenue for the quarter ended Dec. 2010 was $39.2 million, while net loss stood at $12.3 million from the same quarter last year.

Denison is a debt-free company with a cash balance of $97.6 million. The stock rose 80% in the last one year and analysts expect a further upside of 26% in the next one year.

4. Hitachi ( HIT) engages in providing power generation systems and electronic devices.

The company forayed into nuclear technologies in 1957. Since then, the company has designed and developed several research and commercial nuclear reactors.

To conduct its nuclear power business globally, the company formed a strategic alliance with GE and formed Hitachi-GE Nuclear Energy and GE-Hitachi Nuclear Energy in Japan. The company is constructing a third unit at Shimane nuclear plant with a power output of 1373 MW. Besides, Hitachi is the prime contractor for the Ohma nuclear power station. Outside Japan, the company is supplying equipment to the Lungmen nuclear power plant in the U.S. and the China-based Qinshan Phase-III nuclear power station.

During fourth quarter of 2010, the company's net profit margin and operating margin stood at 3.6% and 5.2%, respectively. Besides, return ratios in the fourth quarter were significantly higher relative to overall 2010 numbers.

Analysts expect the stock to deliver 26% in the next one year. The stock is trading at 7.4 times its estimated 2011 earnings.

3. Uranerz Energy ( URZ) engages in the acquisition, exploration and development of uranium properties. The company is focused on exploring properties in the Powder River Basin area of Wyoming.

Two of Uranerz's projects are in the final permitting and licensing stage. The company received the Wyoming department of Environmental permit in late December 2010 for production and is currently awaiting license to construct the Nicholas Ranch uranium mine, where production is expected to start in the first half of 2012.

The company has already entered into long-term uranium sales contracts with two of the largest nuclear facilities in the U.S., including Exelon.

Analysts expect the stock to deliver an upside of 85% with a buy rating of 100%. The stock rose 76% in the last one year and is trading at 33 times its estimated 2012 earnings.

2. Ur-Energy ( URG) is a junior mining company engaged in the exploration and development of uranium mineral properties in Canada and the U.S.

The company is primarily focused on uranium exploration at 12 properties in the state of Wyoming in the U.S. The properties contain National Instrument 43-101 compliant resources of 22 million pounds of uranium and around 3 million pounds in the inferred category. Additional potential for discovery exceeds 60 million pounds of uranium. Ur-Energy is seeking required authorization to mine uranium at the Lost Creek project. The company has two exploration projects in Canada's Thelon Basin: Screech Lake and Gravel Hill.

Analysts polled by Bloomberg give the stock 80% buy ratings and expect it to deliver an upside of 88% over the next one year. The stock is trading at 10.2 times its estimated 2012 earnings.

1. Uranium Resources ( URRE) is a uranium exploration, development and production company.

The company has focused on reclamation activities in Texas since its two remaining operating wellfields were fully depleted in June 2009. However, the company restored fields in Rosita and Vasquez, and full-scale restoration is underway at Ville Dome.

On New Mexico properties, Don Ewigleben, CEO of Uranium Resources, commented, "We made considerable progress in New Mexico this last year and have detailed the progressive actions necessary to move our Churchrock property toward production in 2013. With 101.4 million pounds of in place mineralized uranium material, the eighth-largest known uranium resource base in the world, New Mexico is clearly our premier location. We believe we have a significant advantage in that region and are pursuing opportunities to increase our assets and build greater value for our shareholders."

Analysts expect the stock to deliver 148% in the next one year, following the outstanding 176% return delivered in the last one year.

>>To see these stocks in action, visit the 8 Nuclear Stocks With Upside portfolio on Stockpickr.

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