In the world of nuclear power, there are several ways to invest in the game: uranium exploration, production, enrichment, power plant construction and the utilities that actually run the reactors themselves. In this article, we will focus on enrichment, discussing one investment that may be something investors will want to put on their radar screen in the coming months.

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Enrichment Basics
To start, we need a brief explanation of what enrichment is in the first place. Here is the uranium food chain:

1) Start with exploration to find viable uranium deposits.
2) Once a deposit is located, mining companies bring a mine online and begin digging up ore.
3) Once the actual uranium is mined, it is chemically processed into what's know as uranium oxide (U308), sometimes called "yellow cake".
4) The yellow cake is then delivered to an enrichment plant, where it is converted into a viable fuel (pellets) for nuclear fission.
5) In the enrichment process, the U-235 isotope is "super charged" by separating a gas known as uranium hexafluoride (UF6), which then enables the plant (usually through massive centrifuges) to create the pellets and then make fuel rods.
6) These fuel rods are then shipped to nuclear reactors.

This is the basic process. There are other methods of enrichment, including recycling plutonium from warheads, or reprocessing spent fuel from reactors, all of which most enrichment plants do as well.

From the U.S. Government
Once upon a time the U.S. government did all its own uranium enrichment. However, in 1998, the country's enrichment program was brought public as the United States Enrichment Company (NYSE:USU). Yep. You read that right, this company is a publicly traded spinoff of the United States nuclear program.

SEE: The Economic Reasons Behind Nuclear Power

Fundamentally Strong
Three factors are combining to make this a very solid opportunity:

1) When you see a stock that's trading with a PEG ratio of -0.38, bells should go off in your head. The ratio indicates that the stock is undervalued.. Most stocks trade with a PEG ratio greater than 1, thus the current ratio hints at a bargain.

SEE: Use Price-To-Sales Ratios To Value Stocks

2) The stock is trading with a price-to-book ratio of 0.16. Not many companies in the market have a price to book lower than 1, further indicating a double whammy of fundamental opportunity.

SEE: Value By The Book

3) While the company does not currently pay a dividend, it could in two or three years after its new American Centrifuge plant is completed. Most investors are guessing that the dividend won't be chump change either. If the company does hint at a dividend being paid again, income investors will likely fall all over themselves for a chance to snap up the stock.

The Bottom Line
At the end of the decade, USEC should most likely hold a fair-market value in the $12 area; thus the recent decline could be a great buying opportunity for investors willing to take on a little risk.

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