In the final month of 2022, scientists at Lawrence Livermore National Laboratory ended a rough year with a bang by reproducing the power of the sun in a laboratory, sparking forward-looking interest in so-called nuclear fusion stocks. But what exactly is nuclear fusion?
Naturally, the International Atomic Energy Agency offers a definition, stating that it’s the “process by which two light atomic nuclei combine to form a single heavier one while releasing massive amounts of energy.” It’s a paradigm shift, hence the interest in nuclear fusion stocks. However, I prefer NewScientist’s commentary on the matter.
For the first time in human history, “a controlled fusion reaction has generated more power than was used to kickstart it,” wrote contributor Matthew Sparkes. And that’s really the point. With the development of this astounding technology, science fiction can turn into science fact. Of course, many challenges await the sector – we’re still in the early innings. However, it might not hurt to plan ahead with intriguing nuclear fusion stocks to buy.
Chevron (CVX) sing with "diesel," "food mart" and "car wash" written underneath
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Although Chevron (NYSE:CVX) forged its reputation in the hydrocarbon energy space, the company invested in several alternative energy solutions. It was smart thinking as no guarantees exist that fossil fuels will power the economies of tomorrow. And since the topic is nuclear fusion stocks to buy, you guessed correctly: Chevron supports the development of the underlying technology.
Earlier this past summer, CNBC noted that Chevron along with other major enterprises took part in a $250 million funding raise for TAE Technologies. A privately held firm, TAE represents a nuclear fusion startup with a supposedly unconventional strategy.
To be clear, the underlying tech may take many, many years to fully flesh out and commercialize. However, the beauty of considering CVX as one of the nuclear fusion stocks to buy centers on immediate relevancy. As one of the big oil firms, Chevron can play an integral role in your portfolio right now.
Alphabet (GOOG, GOOGL)
Alphabet Inc. (GOOG, GOOGL) and Google logos seen displayed on a smartphone
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Better known for its digitalization solutions and its Google ecosystem, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) also thinks outside the box. Never satisfied with any one endeavor, Alphabet has an entire business unit dedicated to longshot creative technologies. But folks might not realize that the company also plays a not-insignificant role as one of the nuclear fusion stocks.
Along with Chevron, Alphabet stood among the top enterprises that participated in the aforementioned $250 million funding raise for TAE. Further, the tech giant’s rearch arm will work with Tri Alpha Energy to create an “Optometrist algorithm.” This algo “will focus on significantly decreasing the time it takes to model plasma – the incredibly hot balls of gas which form the core of fusion energy technology.”
Similar to its big oil counterpart, Alphabet presents an intriguing case for nuclear fusion stocks to buy for its contemporary relevance. Thanks to its all-encompassing Google ecosystem, it’s quite possible for GOOG to rise above its current volatile status.
Cenovus Energy (CVE)
oil pumps
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Headquartered in Calgary, Alberta, Cenovus Energy (NYSE:CVE) is another integrated oil and natural gas firm. It’s one of the largest hydrocarbon players in its native Canada. From this angle, CVE presents a ready-made case for nuclear fusion stocks to buy. On one hand, its hydrocarbon specialty offers much relevance, particularly with geopolitics threatening key energy supplies. And on the other, it features a core role in nuclear fusion technologies.
Specifically, the company has been a long-time investor of General Fusion, a Canada-based nuclear energy tech firm. Per its website, General Fusion pursues a fast, efficient, and collaborative path to practical fusion power. While the innovation will probably take decades to flesh out, patient CVE shareholders can bank on its bread-and-butter business while they wait.
In addition, investors also enjoy quantitative information to bolster their confidence. For instance, Cenovus carries a return on equity of nearly 21%, reflecting a high-quality business. As well, the oil and gas sector’s ROE sits at 9.3%.
Babcock International (BCKIF)
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Perhaps not the most intuitive name among nuclear fusion stocks to buy, Babcock International (OTCMKTS:BCKIF) is an international defense company operating in our focus countries of the UK, Australasia, Canada, France and South Africa. However, Babcock also specializes in nuclear engineering services – and it’s a huge player in the field. In addition, Babcock has been making acquisitions to bolster its leadership in nuclear-based innovations. According to data from Crunchbase.com, the defense contractor acquired the UK Atomic Energy Authority in September 2009. This entity represents a U.K. government research organization responsible for the development of nuclear fusion power.
To be fair, when it comes to nuclear fusion stocks, Babcock features a higher-risk profile. For one thing, it trades over the counter so it doesn’t have great visibility stateside. Also, BCKIF slipped down over 23% on a year-to-date basis, worse than the benchmark equities index. Still, if you believe in the potential of this segment, it might be worth checking out.
SNC-Lavalin (SNCAF)
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Another lesser-known entity that’s worth consideration for nuclear fusion stocks, SNC-Lavalin (OTCMKTS:SNCAF) calls Montreal, Canada home. Per its public profile, SNC-Lavalin provides engineering, procurement, and construction services to various industries, including mining and metallurgy, oil and gas, environment and water, infrastructure, and clean energy. As well, the company helps in the development of nuclear facilities.
Moving forward, SNC-Lavalin appears to have its eyes set on integrating nuclear fusion tech once commercialized. Under the company’s thought process, if western governments are to achieve its zero-emissions goals, they must throw everything at it. Certainly, nuclear fusion – with its potential to create virtually limitless energy with no meltdown risk – offers a compelling narrative.
Still, SNC-Lavalin is realistic, with its engineers acknowledging that fusion reactors (developed at scale) could be 30 years away. As well, SNCAF isn’t exactly a confidence-inspiring investment at the moment, losing more than 32% YTD. However, if you’re a believer, SNCAF may be one of the nuclear fusion stocks to consider.
Consolidated Water (CWCO)
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It’s confession time. With pure-play nuclear fusion stocks several years away from dominating the equities sector, I must cheat when creating these lists. To be upfront, Consolidated Water (NASDAQ:CWCO) on the surface has nothing to do with fusion technologies. If I may be blunt, it has nothing to do with energy at all.
Instead, the company focuses on water solutions. And one of the more enticing business units centers on its desalination plants. These facilities convert ocean water into the potable (drinkable) variety. As you know, the world community suffers from a water crisis. Desalination can help rectify this terrible framework but of course, a problem exists: the process just isn’t economically viable.
But that’s also where nuclear fusion may come to the rescue. Again, the innovation focuses on generating more usable power than was used to catalyze it. With such an accretive energy source, desalination would become a potential gamechanger.
Oatly (OTLY)
OTLY stock: Image of oat milk on a tray.
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A Swedish food company, Oatly (NASDAQ:OTLY) aims to foster sustainable sustenance. Mainly, the company produces alternatives to dairy products from oats, hence its name. Fundamentally, Oatly brings many relevancies to the table. As multiple sources pointed out, younger generations gravitated toward plant-based food products. In theory, then, OTLY should be one of the top securities to buy.
Unfortunately, Wall Street doesn’t see it that way. Since the start of the year, OTLY gave up a staggering 79% of equity value. Not only that, the back half of the year has also been awful, shedding about 49%. Undeniably, the problem that plagues plant-based food manufacturers is economies of scale. Simply put, they lack it and that’s why their products ping more expensively than their real counterparts.
However, fusion technologies could change matters by sparking efficiencies across the plant-based food industry’s entire value chain. Therefore, when considering nuclear fusion stocks, it helps to think too about the enterprises that will benefit from the innovation.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
