Nuclear power stocks opened the post-holiday week broadly lower on Monday, with shares of Oklo(NYSE: OKLO) falling 6.3% through 10:45 a.m. ET, Constellation Energy(NASDAQ: CEG) down 6.5%, and Nano Nuclear Energy(NASDAQ: NNE) faring worst of all -- down 10.8%. Hydrogen power stocks are also suffering, with Plug Power(NASDAQ: PLUG) down 11.8%, one notable loser.

And why? To learn the answer to that, you need to look back to the other side of the three-day weekend. On Thursday, you see, The Wall Street Journal reported on "dramatic cuts" to "nearly $10 billion in federal funding for clean-energy projects" that the U.S. Department of Energy is said to be contemplating.

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DOGE strikes again... or does it?

As the WSJ reports, the Elon Musk-led Department of Government Efficiency government advisory office is at the root of these cuts, which propose slashing spending on everything from hydrogen to carbon capture to energy storage to "other technologies" -- which may include nuclear energy.

Thousands of jobs in the Department of Energy, of employees administering the programs, are said to be at risk, albeit the DOE says "no final decisions have been made and multiple plans are still being considered" -- a statement that matches verbatim a similar statement, about similar plans, floated earlier in the month.

More than two weeks later, though, the talk about cutting is still ongoing. And with as much as $10 billion in federal funding potentially on the chopping block, you can understand why investors are feeling nervous.Image source: Getty Images.

Why nuclear power might be safer than you think

That being said, I'm not certain investors should be panicking about this. As WSJ points out, one of the few clean-energy programs that has received funding under the Biden-era Inflation Reduction Act green energy program, which Trump is said to be targeting, is in fact a nuclear project: the Palisades nuclear plant restart in Michigan.

Plus, while Trump has been very public in his disdain for other green energy programs, such as "big ugly windmills" for example, he's been less vocal in criticizing nuclear power programs. That's not necessarily good news for more esoteric energies such as hydrogen, or Plug Power stock. On the other hand, as recently as February, industry experts were predicting that the nuclear industry might actually enjoy a "renaissance" under the new administration.

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Until we hear more specifics about precisely what energy programs Trump and DOGE want to cut, I wouldn't go writing off nuclear power stocks just yet.

Which nuclear stocks are buys, and which are sells?

Or at least not all nuclear power stocks. Certainly, there are risks in investing in any stocks under an administration as erratic as the current one. Still, investors willing to roll the dice on nuclear can at least limit their risk by focusing on companies that are profitable under current conditions, and don't necessarily need special support from Washington to help them become profitable in the future.

In that regard, Constellation Energy stock, with $3.7 billion in trailing net profit, is probably a lower-risk bet than Oklo or Nano Nuclear Energy, neither of which is currently profitable, and neither of which analysts even think can become profitable before 2029 (Oklo), or 2031 (Nano Nuclear Energy), according to analyst forecasts compiled by S&P Global Market Intelligence.

Valued at 17.5 times earnings, pegged for less than 7% annual earnings growth over the next five years, and paying a dividend yield of less than 1%, even Constellation isn't necessarily a stock I'm enthusiastic about. But if you do want to invest in a nuclear future, Constellation Energy seems one of the safer ways to do that.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy. The Motley Fool has a disclosure policy.

Why Plug Power, Oklo, Constellation Energy, and Nano Nuclear Energy Stocks Slumped Today was originally published by The Motley Fool

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