The Misfits: Curtiss-Wright (CW)

While individual investors are looking for the "next big thing" in nuclear power. The big thing may be the one that's been there all along.

Enrico Fermi, 1917

I cut my teeth studying and writing about energy, commodities, and industrials over the past decade. I can assuredly say that the “next big thing” in these industries garners loads of individual investor attention. The comment section for articles or YouTube videos for these types of stocks can become some of the most vitriolic places in the financial media. Anyone who doesn’t give full-throated endorsements of these companies is somehow involved in a conspiracy funded by big [industry] to ruin the company deliberately.

(It’s hyperbole, but you get what I mean)

Hydrogen fuel cell companies, electric vehicles, junior gold miners without operating mines, molten-salt batteries, 3D printers, oil and gas companies in third-world nations with unproven reserves; the list of disruptive businesses that haven’t delivered for investors over the past decade is long. While there may be one or two companies across all of these themes that have maybe eeked out a return, the vast majority have been duds.

What I find peculiar about this phenomenon is the rush to invest in these high-risk endeavors without digging into the industry's guts. Often (really, the theme of this newsletter), better investments are found in the background, supplying both the plucky upstart and the established player.

Nuclear energy appears to be having its time in the sun. Many large tech companies and AI investors think nuclear energy is uniquely positioned to power data centers. Perhaps the most jarring example of this was the headline about restarting Unit 1 at Three Mile Island.

(Note: The reactor in question ran uninterrupted until 2019).

The future of nuclear power is in tension, though. The most recent nuclear reactor built in the U.S. was billions over budget and years behind schedule, and the contractor building it filed for bankruptcy during the process. One alternative solution is the development of new reactors. There are many options: small modular reactors, transportable microreactors, fluoride salt-cooled reactors, light water reactors, and molten chloride reactors. Pretty much everything is on the table these days.

Somewhere, there is likely an extremely charged Reddit thread debating the merits of these options. I’m sure a few investors are looking at some of the companies behind these novel ideas as potential investments.

Instead of trying to bet on one of them, they should consider the one company that supplies equipment to every active nuclear power installation in the U.S. (civilian and military).

Curtiss-Wright (NYSE: CW)

Of course, most people don’t look at Curtiss-Wright as the gatekeeper to America’s nuclear industry. Maybe because it’s embedded within a diversified industrial manufacturer and defense contractor, or maybe it's because few Wall Street analysts or the investing media cover it. Whatever the reason, it fits many of the traits of a Misfit stock.

While I might consider some of these new nuclear ideas long shots, Curtiss-Wright is going all in with a significant push to be the go-to supplier for whatever comes next in nuclear. Let’s dig into its business, how it will likely be a nuclear winner no matter what, and whether investors should see it as a great nuclear investment right now.

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