Trading Nuclear Power

With the potential melt-down of a nuclear reactor in Japan seemingly imminent, some might feel that this is not the most opportune time to talk about nuclear power investments. But, just as there are traders, at this very moment, shorting stocks related to nuclear power, there are investors holding shares, watching their portfolios tumble.

The Wall Street Journal reported that "Hitachi and Toshiba, are each down 16% today." Many other names have fallen as well.

So far, the Japanese are doing everything right. One should be encouraged by their resilience and preparedness. There are several reasons to be optimistic:

1. According to news sources, the reactors were automatically switched off when the disaster struck. Otherwise, the heat from the nuclear process could last for months as the fuel is spent. Since the reactors were turned off the heat should dissipate. The real question is how long this will take.
2. Radiation levels in the atmosphere are currently minimal.
3. The nuclear plants were at-risk due to a massive natural disaster and not human error.

If the reactors begin to cool, as expected, then investors in the U.S. will be presented with an opportunity to buy nuclear power stocks low. This includes many utilities, which are poised to benefit from growth in energy consumption from new products like plug-in hybrids.

• Entergy Corporation (ETR)
• Edison International (EIX)
• PG & E Corp. (PCG)
• Exelon Corp. (EXC)
• Xcel Energy Inc. (XEL)

Utility stocks are generally very stable investments. They tend to have high dividend yields and while many produce electricity using nuclear power, they are generally diversified in their production methods.