Tokyo Electric Power Stock Leads 3 Japanese Nuclear Energy Names Worth A Closer Look

Nuclear energy stocks are back in focus as investors look for power sources that are both reliable and less exposed to the swings in fossil fuel markets, especially with energy prices and inflation closely watched across regions. The Nuclear Energy Stocks screener helps you quickly filter companies involved in uranium production, enrichment and reactor operations so you can focus on businesses tied directly to long term electricity demand and energy security themes. In this article, you will see 3 stocks from the screener that stand out on business quality, balance of risks and role in the nuclear value chain.

Tokyo Electric Power Company Holdings (TSE:9501)

Overview: Tokyo Electric Power Company Holdings is a major Japanese utility that generates, transmits and sells electricity and gas in Japan and overseas, using a broad mix of nuclear, thermal, fuel based, hydro, solar, geothermal and offshore wind power, alongside a range of related services from fuel procurement to systems and real estate.

Operations: TEPCO generates most of its revenue in Japan, with approximately ¥4,989b from its Energy Partner retail business, ¥2,294b from Power Grid operations and smaller contributions from Holdings, Renewable Power and other segments after group adjustments.

Market Cap: ¥811.9b

For nuclear focused investors, Tokyo Electric Power Company Holdings combines direct exposure to Japan’s power grid and retail electricity demand with a complex risk profile that deserves closer attention. The stock trades on a low P/S multiple compared with peers. Analysts expect earnings to grow around 46.9% a year and move the business back into profitability within three years, even as the company currently reports losses and carries debt that is not well covered by operating cash flow. Regulatory and reputational risk around Fukushima remains a core issue, but recent IAEA findings that ALPS treated water discharges are within safety standards help support the long term case for TEPCO’s nuclear operations and ongoing clean up efforts.

TEPCO’s low P/S and expected earnings recovery create a story many investors might be only half seeing, so use the 2 key rewards and 1 important major warning sign to understand what could really tip the balance next

Marubeni (TSE:8002)

Overview: Marubeni is a large Japanese trading and investment company that connects producers and customers across many sectors, from consumer goods and food to energy, metals, infrastructure, digital services and finance, often taking stakes in underlying assets rather than just acting as a middleman.

Operations: Marubeni generates most of its revenue from Food & Agri Business at ¥3,720.5b, with sizable contributions from Energy & Chemicals at ¥1,365.8b, Metals & Mineral Resources at ¥918.9b, Aerospace & Mobility at ¥691.3b, Lifestyle at ¥644.1b, Power & Infrastructure Services at ¥485.3b, IT Solutions at ¥202.9b and smaller amounts from next generation and finance related businesses.

Market Cap: ¥8,132.2b

Marubeni can appeal to nuclear and broader energy investors because it blends exposure to power, infrastructure and natural resources with earnings that have grown 8.1% over the past year and margins that have inched higher. Revenue growth forecasts of 4.1% a year are more measured. Analysts also see upside for the stock while management is active with buybacks, including authorizing up to 20,000,000 shares and recently repurchasing 11,766,800 shares, which can support earnings per share. On the risk side, debt is high, funding leans on external borrowing and the dividend record is uneven, all overseen by a board that has many new directors. The recent EagleRidge Energy acquisition in U.S. natural gas suggests that the full story on Marubeni’s energy footprint is still developing.

Marubeni’s mix of growing earnings, measured revenue forecasts and fresh board oversight raises a question: is the current share price fully reflecting the story in the 3 key rewards and 2 important warning signs?

Mitsubishi Heavy Industries (TSE:7011)

Overview: Mitsubishi Heavy Industries is a global industrial group that builds large scale equipment for energy, infrastructure, logistics and aerospace, from gas and nuclear power systems to aircraft engines, ships, defense hardware and factory machinery, with long standing ties to government and corporate clients worldwide.

Operations: Mitsubishi Heavy Industries generates most of its revenue from Energy Systems at ¥2,062.6b, Aircraft, Defense & Space at ¥1,393.9b, Plants & Infrastructure Systems at ¥880.9b and Logistics, Thermal & Drive Systems at ¥630.8b, with smaller contributions and group eliminations in other segments.

Market Cap: ¥12,370.4b

Mitsubishi Heavy Industries offers investors exposure to clean energy, defense and industrial automation in one company, backed by a record order backlog of ¥10.77t that provides multi year revenue visibility. Earnings have been growing, margins are improving from 4.9% to 6.9%, and recent work on carbon capture with Entergy shows how its gas turbines and CCS technology may benefit as power producers look to cut emissions. At the same time, the stock trades on a higher P/E than the wider machinery sector. There are also risks around foreign exchange swings, defense order concentration and higher working capital needs as inventories rise. That mix of potential opportunities and risks makes the next stage of Mitsubishi Heavy Industries story important to understand in detail.

Mitsubishi Heavy Industries’ swelling order book and rising margins suggest a story investors may not be fully pricing in yet. See how that translates into future expectations in the analyst forecasts for Mitsubishi Heavy Industries, including one factor that could change the picture quickly.

The three nuclear energy stocks in this article are only a starting point, and the full Nuclear Energy Stocks screener reveals 33 more companies with equally compelling narratives across uranium mining, enrichment and reactor technology. Use Simply Wall St to identify and analyze the specific catalysts and narratives that matter to you, so you can filter this wider nuclear universe down to the opportunities that best match your own highest conviction.

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Curious About What You Might Be Missing?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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