Top 5 Nuclear Stocks to Watch According to Morgan Stanley’s Latest Analysis

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Investing.com -- Nuclear energy stocks are gaining attention as the sector evolves with new technologies and partnerships.

Morgan Stanley’s recent analysis highlights several companies positioned to benefit from developments in the nuclear power industry. From established utilities to specialized equipment manufacturers, these stocks represent various opportunities within the nuclear sector.

1. Engie SA

Morgan Stanley rates Engie as Overweight, noting that the deal with the Belgian State to extend the life of Doel 4 and Tihange 3 reactors by 10 years should positively impact nuclear provisions and group structure. While nuclear operations are becoming less material to Engie’s overall earnings, making it less of a pure nuclear play, the Belgian nuclear deal provides the company with greater flexibility in its asset disposal program. This flexibility could accelerate the share re-rating process, according to Morgan Stanley’s analysis.

Engie SA reported a slight dip in first-quarter core earnings, citing lower energy prices and reduced nuclear availability in Belgium; however, the company confirmed its full-year financial guidance.

2. Talen Energy Corp (NASDAQ:TLN)

Talen has secured significant deals with major tech companies, most notably Amazon. Their original agreement included a premium of approximately $35/MWh for a behind-the-meter contract to provide power to Amazon’s campus colocated with Talen’s Susquehanna nuclear plant. This arrangement offers time-to-power benefits compared to standard grid connections.

Talen recently expanded this partnership, increasing the deal size to 1,920MW by 2032 and shifting to a front-of-the-meter arrangement. Morgan Stanley estimates pricing around $83/MWh, with a premium to market energy and capacity prices of roughly $30/MWh.

3. Public Service Enterprise Group

Morgan Stanley highlights Public Service Enterprise Group’s position in a sector benefiting from strong federal and state support. The analysis notes that nuclear power for data centers is becoming more prevalent, creating new opportunities for established utilities like PSEG. However, the report acknowledges that challenges with large-scale new builds remain a consideration for investors evaluating the company’s long-term growth potential in the nuclear space.

In a recent development, Public Service Enterprise Group received an upgrade from BMO Capital Markets to ’Outperform’ from ’Market Perform,’ with the firm citing the company’s strong operational performance and a favorable regulatory environment.

4. Curtiss-Wright

Curtiss-Wright appears in Morgan Stanley’s analysis as a key idea in the "Future of Energy" category. While small modular reactors (SMRs) hold long-term promise, the company is also positioned to benefit from emerging opportunities in Fourth Generation reactors and other advanced nuclear technologies, potentially providing specialized components and systems for these next-generation nuclear facilities.

Curtiss-Wright Corporation announced it has been awarded a contract to provide its advanced digital control and instrumentation systems for a new research reactor being built in Europe.

5. GE Vernova

Similar to Curtiss-Wright, GE Vernova is identified by Morgan Stanley as a key player in emerging nuclear technologies. The analysis suggests GEV could benefit from developments in small modular reactors, Fourth Generation reactors, and thorium-based technologies, leveraging its expertise in power generation equipment and systems for the evolving nuclear industry.

GE Vernova reported first-quarter revenue that beat analyst expectations and also secured an order from the Tennessee Valley Authority to provide new main generator circuit breakers for the Browns Ferry Nuclear Plant.

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