Nuclear Power: Still a Safe Bet
In this issue, we return to two underappreciated growth stories that energy investors shouldn’t overlook: the long-term bull case for uranium demand and the near-term recovery in the market for marine seismic services.
Although nuclear power may be losing the public relations battle in some countries after the Fukushima Daiichi disaster, economic and demographic imperatives should ensure that, excluding Japan and Germany, most countries with large reactor fleets remain committed to the technology. At the same time, emerging economies such as China and India continue to forge ahead with plans to growth their nuclear power capacity dramatically over the next decade. This demand growth, coupled with emerging constraints on the supply side, are bullish for uranium prices.
Meanwhile, investors shouldn’t ignore the turnaround that’s under way in the notoriously cyclical market for offshore seismic services and data.
We remain bullish on pricing in the marine seismic market through at least 2014. Not only are oil and gas companies stepping up offshore exploratory efforts in established markets such as the North Sea and West Africa, but major discoveries off Africa’s east coast also promises to yield a great deal of work. Meanwhile, activity in the Gulf of Mexico should continue to accelerate as licensing and permitting normalizes, further tightening the global supply-demand balance. Management teams also cited increased demand for marine seismic services in frontier markets such as India, Uruguay and the Russian Arctic.
Conditions on the supply side are equally bullish in the near term, with only four vessels slates to join the fleet in the next two years. However, analysts have expressed concerns that a recovery in pricing could prompt the five leading marine geophysical companies to overbuild once again.
In This Issue
The Stories
1. Although nuclear power may have lost some of its luster in the wake of the Fukushima Daiichi disaster, economics and demographics suggest that the nuclear renaissance will continue over the long term. See Fukushima Daiichi and Its Aftermath.
2. Investors shouldn’t overlook the turnaround that’s under way in the notoriously cyclical market for offshore seismic services and data. See Making Waves.
The Stocks
Petroleum Geo-Services (OTC: PGSVY)–Buy < 17.50 in Aggressive Portfolio
Cameco Corp (TSX: CCO, NYSE: CCJ)–Buy < 27 in Elliott’s Best Buys List
Although nuclear power may be losing the public relations battle in some countries after the Fukushima Daiichi disaster, economic and demographic imperatives should ensure that, excluding Japan and Germany, most countries with large reactor fleets remain committed to the technology. At the same time, emerging economies such as China and India continue to forge ahead with plans to growth their nuclear power capacity dramatically over the next decade. This demand growth, coupled with emerging constraints on the supply side, are bullish for uranium prices.
Meanwhile, investors shouldn’t ignore the turnaround that’s under way in the notoriously cyclical market for offshore seismic services and data.
We remain bullish on pricing in the marine seismic market through at least 2014. Not only are oil and gas companies stepping up offshore exploratory efforts in established markets such as the North Sea and West Africa, but major discoveries off Africa’s east coast also promises to yield a great deal of work. Meanwhile, activity in the Gulf of Mexico should continue to accelerate as licensing and permitting normalizes, further tightening the global supply-demand balance. Management teams also cited increased demand for marine seismic services in frontier markets such as India, Uruguay and the Russian Arctic.
Conditions on the supply side are equally bullish in the near term, with only four vessels slates to join the fleet in the next two years. However, analysts have expressed concerns that a recovery in pricing could prompt the five leading marine geophysical companies to overbuild once again.
In This Issue
The Stories
1. Although nuclear power may have lost some of its luster in the wake of the Fukushima Daiichi disaster, economics and demographics suggest that the nuclear renaissance will continue over the long term. See Fukushima Daiichi and Its Aftermath.
2. Investors shouldn’t overlook the turnaround that’s under way in the notoriously cyclical market for offshore seismic services and data. See Making Waves.
The Stocks
Petroleum Geo-Services (OTC: PGSVY)–Buy < 17.50 in Aggressive Portfolio
Cameco Corp (TSX: CCO, NYSE: CCJ)–Buy < 27 in Elliott’s Best Buys List
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