BROKERS’ NOTES: Buy into nuclear energy, sell Marathon Petroleum

Buy: Global X Uranium ETF

Nuclear energy is regarded as a clean energy technology as it produces nearly zero carbon dioxide or other greenhouse gas emissions. Nuclear energy also doesn’t produce air pollutants that are associated with burning fossil fuels for energy. But this is not the reason to take a look at it.

A couple of weeks ago, shares in nuclear energy companies surged to record highs after Amazon and Google struck landmark power supply deals, boosting efforts to deploy the first small modular reactors in the US. 

The deals support the deployment of up to a dozen next-generation reactors to provide low-carbon electricity to power the energy-hungry AI data centres of Amazon and Google. In the US, solar, wind and battery storage make up 95% of all capacity waiting to connect to the grid, while nuclear makes up less than 1%.

An easy and liquid way to get exposure to this is through the Global X Uranium ETF, traded on the New York Stock Exchange.

Sell: Marathon Petroleum

Marathon Petroleum Corp is an integrated, downstream energy company.

Oil prices fell sharply last month after Israel’s attack on Iran avoided oil and nuclear facilities and Tehran gave a measured response to the strikes. Brent crude has settled down around $72 a barrel. Focus has now returned to the fundamentals of global energy markets, which this year has been a story of ample supply and falling demand.

A chief driver is slowing economic growth in China, a huge energy consumer. Opec has tried to establish a floor for oil prices this year, with little success.

At the same time, the US is pumping unprecedented volumes of crude. The company was scheduled to release results in early November and is likely to see a significant drop in earnings. It is against this backdrop that the stock is a sell at current levels.