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Business Insider
3 days ago
- Business
- Business Insider
Why nuclear is the center of the stock market's energy trade in 2025
Nuclear energy stocks got a big boost this week after US Transportation Secretary and interim NASA administrator Sean Duffy announced plans to expedite a nuclear reactor on the moon. The comments sent stocks such as Oklo, Nucor and Nano Nuclear Energy jumping, with the gains extending into Wednesday's session. But it's more than seemingly one-off comments that's boosting nuclear stocks this year, and the alternative power source has become the hottest energy trade out there in 2025. Nuclear power has come sharply into focus in recent years, with advocates including Tesla CEO Elon Musk and, more recently, the Trump White House. A quick look at the energy sector reveals that nuclear energy is outpacing its peers. The VanEck Uranium and Nuclear ETF (NLR) is up almost 50% year-to-date, compared to the Utilities Select Sector SPDR ETF (XLU), which is up 13%, and the Energy Select Sector SPDR ETF (XLE), which is down about 1% this year. Nuclear energy is riding the AI wave It's hard to examine the growth of nuclear energy stocks in 2025 without talking about the role of nuclear in the AI boom. AI demand has continued to skyrocket as companies have doubled down on capex plans in the space. Dizzying demand for data centers has created an equally enormous need for power. Goldman Sachs predicts that data center power demand will increase 165% by 2030. That's sparked a search for alternative power sources to support the continued growth of data centers and AI. "It was easy and fast to reactivate nuclear reactors to meet the growing demand for clean energy from data centers," said Alexander Lis, chief investment officer at Social Discovery Ventures. "Other energy sources were either less clean, like coal, or longer to build, like wind or solar." Lis added that his firm considers this demand to be sustainable, as "many big tech companies have already announced their plans to use nuclear energy for their data centers." Last September, Constellation Energy said it would reopen Three Mile Island, with Microsoft set to purchase the power power generated by the site. Eric Schiffer, chairman and CEO of The Patriarch Organization and a nuclear energy investor, echoed this sentiment, highlighting the role that it may play in helping the US achieve AI dominance. "China [is] far more equipped right now from an energy platform perspective," he stated. "Nuclear is a critical piece to ensure we're staying at pace. You can't lose this race over an energy constraint." An under-the-radar Trump trade Schiffer and others believe that Trump's focus on AI will benefit nuclear energy stocks in the near term. "The Trump administration's policy priorities to support AI advancement and the unleashing of American innovation has been centered around a deregulation focus and a markets-driven all-of-the-above energy strategy," said Jeff Le, managing principal at consulting firm 100 Mile Strategies. "It includes an audacious goal of quadrupling US nuclear energy capacity to 500 gigawatts by 2050." Le added that Trump's recent executive orders put "nuclear reactor licensing, fuel reprocessing, and domestic production, at the top of its 'Energy Dominance' agenda." The cumulative effect of already soaring demand for power from AI and Trump's turn away from renewables in the search for alternative power sources means nuclear has been a big winner this year. Importantly for investors, Schiffer thinks this bullish period will continue for another 18 months or so.
Yahoo
09-06-2025
- Business
- Yahoo
Should You Invest in the Energy Select Sector SPDR ETF (XLE)?
Launched on 12/16/1998, the Energy Select Sector SPDR ETF (XLE) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Broad segment of the equity market. An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors. Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 16, placing it in bottom 0%. The fund is sponsored by State Street Global Advisors. It has amassed assets over $26.69 billion, making it the largest ETF attempting to match the performance of the Energy - Broad segment of the equity market. XLE seeks to match the performance of the Energy Select Sector Index before fees and expenses. The Energy Select Sector Index includes companies from the following industries: oil, gas & consumable fuels and energy equipment & services. Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same. Annual operating expenses for this ETF are 0.08%, making it the least expensive product in the space. It has a 12-month trailing dividend yield of 3.43%. It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis. This ETF has heaviest allocation in the Energy sector--about 100% of the portfolio. Looking at individual holdings, Exxon Mobil Corp (XOM) accounts for about 23.83% of total assets, followed by Chevron Corp (CVX) and Conocophillips (COP). The top 10 holdings account for about 74.12% of total assets under management. So far this year, XLE has lost about -1.79%, and is down about -4.52% in the last one year (as of 06/09/2025). During this past 52-week period, the fund has traded between $76.44 and $97.27. The ETF has a beta of 0.76 and standard deviation of 25.84% for the trailing three-year period, making it a high risk choice in the space. With about 26 holdings, it has more concentrated exposure than peers. Energy Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLE is an excellent option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well. IShares Global Energy ETF (IXC) tracks S&P Global 1200 Energy Sector Index and the Vanguard Energy ETF (VDE) tracks MSCI US Investable Market Energy 25/50 Index. IShares Global Energy ETF has $1.69 billion in assets, Vanguard Energy ETF has $6.78 billion. IXC has an expense ratio of 0.41% and VDE charges 0.09%. To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Energy Select Sector SPDR ETF (XLE): ETF Research Reports Chevron Corporation (CVX) : Free Stock Analysis Report Exxon Mobil Corporation (XOM) : Free Stock Analysis Report ConocoPhillips (COP) : Free Stock Analysis Report iShares Global Energy ETF (IXC): ETF Research Reports Vanguard Energy ETF (VDE): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
29-04-2025
- Business
- Yahoo
XOM, CVX, COP: Don't Miss the Bargain U.S. Energy Stocks Transcending Trump Tariff Mania
Like the broader market, energy stocks have been pummeled in recent weeks. Investors reasonably fear that tariffs and an escalating tit-for-tat trade war will slow the global economy and thus reduce oil demand. Crude oil prices have been down 8.8% over the past month, and the Energy Select Sector SPDR ETF (XLE), the largest energy sector ETF, has been down 12.4%. Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter. Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox. But there are attractive opportunities in the oil patch amidst the selloff. While oil demand may decline in the short term if there is a global slowdown, tariff uncertainty should clear at some point, and fears about declining demand will recede. In the meantime, oil stocks are well-known for their inexpensive valuations and attractive dividend yields. Here are three top U.S. oil stocks for investors to consider: Exxon Mobil (XOM), Chevron (CVX), and ConocoPhillips (COP). With a massive market cap of nearly $470 billion, ExxonMobil is the largest U.S. oil stock, making it a good one to start with. ExxonMobil is an integrated oil and gas company operating across exploration, production, refining, chemicals, transportation, and marketing. It has also ventured into renewable energy with forays into carbon capture and storage, hydrogen, lithium, and more, making this a well-rounded energy company for today and tomorrow. Some of ExxonMobil's most notable assets include over 1.4 million acres in Texas' Permian Basin with an estimated 16 billion BOE (barrels of oil equivalent), and its significant offshore assets off the coast of Guyana. Last year, ExxonMobil became even more prominent when it completed the nearly $60 billion acquisition of Pioneer Natural Resources in an all-stock deal that doubled its footprint in the Permian Basin. In addition to its massive size and scale, ExxonMobil is widely recognized as a top dividend stock. The company has grown its dividend per share for an impressive 42 years in a row. Additionally, shares yield an attractive 3.6%, well above the broader market and a touch above the sector average, as the S&P 500 currently yields 1.5%. ExxonMobil returned a massive $36 billion to shareholders in 2024, through a combination of dividends and share repurchases. Shares of the world's largest energy company are relatively cheap, trading at 15.8x 2025 earnings estimates (for comparison, the S&P 500 currently trades for just under 20x 2025 earnings). Turning to Wall Street, XOM earns a Moderate Buy consensus rating based on 11 Buys, five Holds, and zero Sell ratings assigned in the past three months. The average analyst XOM stock price target of $128.79 implies ~19% upside potential from current levels. With a market cap of $241.3 billion, Chevron isn't as big as ExxonMobil but is still the second-largest U.S. oil company. Like its larger peer, it is a vertically integrated oil company operating in all facets of the oil business. Like ExxonMobil, Chevron is a major player in the Permian Basin, where it now produces one million barrels of oil per day. It also has substantial assets in the Gulf of Mexico, Kazakhstan, and beyond. Chevron has a strong balance sheet and is an outstanding dividend stock with an attractive 4.8% dividend yield, significantly higher than that of the broader market and both of its peers in this comparison. Chevron also has a strong history of dividend growth, having grown its dividend for the past 37 years and counting. Chevron also returns capital to shareholders via a massive $75 billion share repurchase program initiated in 2023. In 2024, the Houston-based company returned $27 billion to shareholders through a combination of dividends and share repurchases and bought back 5% of its outstanding shares. Chevron's valuation is on par with that of ExxonMobil, trading at 15.8x 2025 earnings estimates, so it is also several turns cheaper than the S&P 500. On Wall Street, CVX earns a Moderate Buy consensus rating based on nine Buys, six Holds, and one Sell ratings assigned in the past three months. The average analyst CVX stock price target of $163.86 implies 18% upside potential from current levels. Last but not least, with a market cap of $116.1 billion, ConocoPhillips is smaller than ExxonMobil and Chevron, but it is still a major player among U.S. oil stocks. In November 2024, ConocoPhillips completed the $22.5 billion all-stock deal to acquire Marathon Oil, which the company touted immediately accretive to cash flow, earnings per share, and return of capital per share. ConocoPhillips operates in 14 countries, including the United States, Canada, Norway, Australia, and Malaysia. The Houston-based company is also the cheapest stock in this comparison, with an inexpensive valuation of just 12.3x 2025 earnings estimates. Like ExxonMobil and Chevron, ConocoPhillips is an attractive dividend stock, with a solid yield of 3.5%. In recent years, ConocoPhillips has made Variable return on cash (VROC) dividend payments to shareholders in addition to its quarterly dividends, which varied based on factors like performance and free cash flow. However, the company recently began incorporating these VROC payments into the quarterly dividend payments, which are paid concurrently with its quarterly dividends. In 2024, the company returned $9.1 billion to shareholders by repurchasing $5.5 billion worth of shares and paying out $3.6 billion in dividends and VROC payments. The company plans to return an impressive $10 billion to shareholders through this combination in 2025. Turning to Wall Street, COP earns a Strong Buy consensus rating based on 20 Buys, one Hold, and zero Sell ratings assigned in the past three months. The average analyst COP stock price target of $123.76 implies 35% upside potential from current levels. ExxonMobil, Chevron, and ConocoPhillips offer inexpensive valuations, attractive dividend yields, and strong histories of returning capital to shareholders, and they offer the potential for significant upside if and when oil prices rebound. I like all three of these choices as strong options for investors, though I currently view Chevron and ConocoPhillips as the most attractive. I like Chevron based on its 4.9% dividend yield and its long history of growing its dividend over many decades, and I'm bullish on ConocoPhillips based on its cheap valuation, compelling combination of shareholder returns, and the substantial potential upside suggested by its average analyst price target. Disclaimer & DisclosureReport an Issue Sign in to access your portfolio
