Nuclear power has had plenty of ups and downs in its history.  Yet, while many people are familiar with the industry’s headlines, nuclear power is often overlooked as an investment.

Before I get to how to invest in nuclear power, let’s take a look at why you should invest in this oft-maligned energy industry.

For decades, the nuclear energy industry was stagnant.  Several infamous nuclear accidents kept a lid on additional power plants being built.  The number of nuclear plants worldwide had been sitting at roughly 430 for years before recently increasing to 439.

But all that’s about to change.  China has approximately 100 new nuclear plants planned to meet the energy needs of their huge and growing population.

Why would they choose nuclear power?  Because, nuclear energy is by far one of the most efficient forms of energy generation in existence. It’s easily the best known energy source in terms of bang for the buck.

What’s more, nuclear power is one of the cleaner forms of energy out there. Nuclear plants generate almost zero emissions. And, nuclear waste, while radioactive, takes up very little space and is easily contained.

Unfortunately, multiple disasters have cast a shadow on the industry.  When a nuclear accident occurs, it tends to be a big deal – think nuclear meltdown.

The industry had been without incident for quite some time before the 2011 Fukushima disaster in Japan.  The crisis brought nuclear power back into the spotlight, and in a very negative way.

The thing is, any modern nuclear power plants would never have had the issues that Fukushima dealt with.  Even if the Japanese plant had been maintained properly, the disaster most likely would have been avoided.

Nevertheless, the industry suffered severely from the negative publicity.  And, it caused investors to flee in droves.

Here’s the thing:  the disaster has passed.  China still needs power and still intends to build nuclear reactors.  Moreover, as I mentioned earlier, new nuclear facilities have far more advanced safety features. The Fukushima incident can’t happen with the way plants are built now.

Let me put it this way:  nuclear power is too important and efficient of an energy source to fall by the wayside.

That being said, what’s the best way to invest in nuclear power?

Well, you could invest in actual nuclear plant builders. The problem is, there are just a few of these in the world (because plants are so expensive to build).  What’s more, the companies that build nuclear plants, like General Electric (GE) are huge and have many other revenue sources.  As such, you would be investing in a lot more than just the nuclear industry.

What about the companies that use nuclear power? Essentially, utilities.

First off, with utilities, investors run into the same problem there is with nuclear plant builders – investing in more than just nuclear power. A utility generally has multiple sources of power, so an investor may be investing in nuclear energy, natural gas, and coal at the same time.

More importantly, utilities have capped earnings. They can only make a certain percentage in profits to keep power affordable to the masses. That’s why most utilities pay dividends and are classified as defensive stocks.  It’s because they can’t be growth opportunities with capped earnings.

That leaves one more significant way to invest in nuclear power. And, it’s by far the most effective way to do so.  In fact, it’s the obvious choice.

I’m talking about uranium companies.

Of course, uranium is the primary ingredient in nuclear fuel.  The radioactive metal is mined and then refined to become a product that is vital in the nuclear fission process that occurs in nuclear reactors.

The good thing about uranium miners is that by far the most common use of uranium is for nuclear power.  When you invest in uranium companies, you are by proxy investing in the nuclear industry.

What’s more, the price of uranium fluctuates with the demand for nuclear energy.  Even better, a uranium company’s stock price is typically reflective of the price of uranium.

By and large, the higher the price of uranium, the more revenues and profits uranium miners generate.

Another positive for uranium companies is they often lock in long-term contracts with power companies. In other words, there’s nearly always at least some demand for uranium they produce.

Finally, uranium miners tend to be smaller companies. As such, the stocks are generally priced at very reasonable levels. Plus, after the Fukushima crisis, most of the companies are undervalued by the market.

Here’s the bottom line:

It’s a great time to invest in nuclear power as the industry is ripe for a rebound.  Uranium companies are the optimal way to get exposure to nuclear energy. Best of all, many uranium miners are trading at dirt cheap valuations.