But as I point out in this week’s main feature article, a nuclear renaissance is unfolding in the emerging world as China, Russia and other nations continue building reactors at a rapid clip, because of their low emissions and reliable, long-term operation.

While there are no real pure plays on the construction and operation of nuclear power stations, Tokyo-based Toshiba (Tokyo: 6502) is an excellent investment in that space thanks to its Westinghouse division. Uranium miners should also come back into favor over the next year or so, as the global rush to build reactors drives solid demand growth for the yellow ore.

The Builder

As with most Japanese companies, Toshiba is highly diversified, making everything from consumer electronics to washing machines, but it is the leading publicly traded company involved in the design, engineering and construction of nuclear power facilities.

Along with its Westinghouse subsidiary, the company has been working on a design for what it calls the Super Safe, Small and Simple (4S) reactor. Capable of generating 10 megawatts of electricity—a 50 megawatt version is also planned—the 4S is self-contained and largely automated.

The 4S also uses fast neutron technology that relies on reflector panels rather than fuel rods, precluding periodic refueling and nuclear proliferation risk. With an operational life of 30 years, the 4S is a relatively simple and inexpensive design that could be easily installed in remote emerging market countries where there is little nuclear power expertise.

Toshiba is currently working with the US Nuclear Regulatory Commission (NRC) and the village of Gelena, Alaska on plans to install a 4S reactor in the municipality.

Village residents are supportive of the reactor and the NRC hasn’t voiced any major concerns about it. In fact, under the Nuclear Power 2021 Act, the federal government would pick up 50 percent of the tab. However, the 4S has faced hurdles in obtaining insurance, as well as in legal and siting regulations.

Despite being less than 1/100th the size of traditional reactors and exponentially safer, the 4S is subject to the same regulations as a traditional reactor that kills much of the economy it offers. As a result, the NRC is currently working to update the regulatory requirements for the device, which is a time-consuming task.

In the meantime, Toshiba’s Westinghouse unit is involved in the planning and construction of many of the nuclear reactors now under construction. China is currently building four Westinghouse AP1000 third-generation reactors, which will be the first of the design to go into operation.

Several more AP1000s are slated to begin construction around the world over the next three years. Westinghouse has also been tapped to provide safety systems for reactors in Slovenia and Russia.

While nuclear energy isn’t Toshiba’s only line of business, its social infrastructure division is the company’s largest at nearly half of revenues. It is also its fastest growing, with revenues up by more than 25 percent in the first half of this year versus the same period last year, largely thanks to the quickening pace of nuclear construction. Although Toshiba has cut its revenue growth forecasts for all of its other divisions, it has upped its forecast for social infrastructure from 6.3 percent to 6.6 percent.

Toshiba’s other divisions have acted as a drag on the company so far this year, but analysts increasingly recognize the company’s social infrastructure operations a “bread-and-butter” growth generator. The company will also benefit from any pull back in the Japanese yen, which has appreciated as China’s growth has slowed. Given the yen’s role as a regional safe haven currency, the yen should weaken commensurately as Asian growth worries subside.

While we wait, Toshiba consistently maintains a 3 percent dividend yield and currently pays out a JPY4 semiannual dividend. Buy Toshiba up to JPY300.

The Miner

Uranium miners represent the purest exposure to growing demand in nuclear energy.

Miners have been under severe pressure recently as cheap natural gas in the US has made gas-fueled electricity generation more attractive. Global uranium demand also has dipped slightly due to the shutdown of eight German reactors. That’s led several major research firms to downgrade uranium miners, including Cameco (NYSE: CCJ). However, downgrades of Cameco are shortsighted.

Driving the negative sentiment are low uranium prices, which are off by more than 60 percent since their highs of four years ago. This weak price environment has pushed several smaller miners out of the market, because their production wasn’t economical at current price levels.

Cameco is the largest and lowest-cost uranium producer in the world, on track to produce 36 million pounds by 2018. It will be helped towards that production goal when operations commence at its Cigar Lake joint venture in Saskatchewan, Canada, one of the richest sources of uranium in North America.

While Cameco has been shouldered with a low selling price for its ore over the past two years, it should see higher prices in the future as long-term supply contracts expire and the company renegotiates them at more favorable terms.

I expect uranium prices to rise over the near term, because production is currently running at a 40 million pound deficit to demand. That deficit has been made up by dipping into existing stocks and using uranium from dismantled nuclear warheads. But as you can see in my uranium demand chart in this week’s main feature article, uranium demand should begin taking off over the next two years as new reactors come online.

In particular, Cameco will benefit from surging Chinese demand for uranium. The company is the primary supplier of the country’s ore, under a contract that runs through 2025.

Although uranium demand has been relatively weak over the past year, Cameco has managed to grow its revenue by nearly 12 percent while maintaining a net margin of 21 percent, thanks to its low-cost operations. The company also carries very little debt and has grown its dividend by more than 15 percent over the past five years.

Cameco’s shares will likely remain volatile over the short term because of analyst pessimism, but it faces extremely attractive long-term prospects. Take advantage of the stock’s current weakness and buy Cameco under 22.