NuScale Power (NYSE:SMR) is shifting the landscape of nuclear energy production. In essence, they create small modular reactors (SMRs) that can be produced en masse in factories. These reactors are adaptable, meaning they can increase or decrease their power output according to demand, and they are generally more cost-effective than traditional large nuclear plants.
NuScale is mentioned alongside other energy companies, like Oklo and Bloom Energy, which aim to provide clean energy solutions for artificial intelligence (AI) and data centers. However, unlike Oklo and Bloom, whose stock prices have appreciated since last May, NuScale has seen a decline of about 65% over the past year.
At the moment, with shares priced under $13 and a market capitalization near $4.5 billion, is it a wise investment? It’s a question worth pondering.
The Potential of Nuclear Power Amid Limited Earnings
On the bullish side, there are reasons to consider NuScale’s stock at its current price. I mean, the need for nuclear power is significant. It may not be what we usually think of when considering clean energy, but if implemented across various states, it could address the rising electricity demand that our existing power grid struggles with.
This context benefits not just NuScale, but its rivals as well. What stands out for NuScale, though, is its first-mover advantage: it is currently the only U.S. reactor developer that has an NRC-approved SMR design. In contrast, other firms like Oklo and Nano Nuclear Energy are still in the waiting game for approval, which could take additional time.
I also find it intriguing that NuScale has ongoing projects in the pipeline. They’re collaborating with a Romanian energy company to build a 462-megawatt power facility, and here in the U.S., they plan to deliver 6 gigawatts of SMR infrastructure to the Tennessee Valley Authority (TVA) via their partner ENTRA1.
But realistically, we shouldn’t expect these projects to wrap up before 2030, and currently, NuScale hasn’t created any noteworthy revenue. In fact, their revenue for the latest quarter was around $565,000, with an operating loss of $57 million. While they have a robust liquidity situation—around $1 billion, with $341 million in cash and equivalents—their current lack of revenue makes the $4.5 billion market cap feel a bit inflated.
So, perhaps NuScale shouldn’t be seen as a clear buy at the moment. Many investors might prefer to wait until the company can demonstrate its first solid financial return.
Should You Consider Buying NuScale Power Stock Now?
Before jumping into a buy of NuScale Power stock, there are a few things to weigh.
According to the Motley Fool Stock Advisor, their analysts have pinpointed what they term the 10 best stocks available right now, and surprisingly, NuScale isn’t on the list. These stocks are said to have the potential for substantial returns in the near future.
And consider Netflix: if you had invested $1,000 when it was first recommended back in December 2004, you’d see a staggering return of $463,900! Or look at Nvidia; if you invested based on their recommendation in April 2005, you’d now have $1,294,401!
It’s worth noting that the stock advisor‘s average return is a remarkable 978%, especially when stacked against the S&P 500’s 211%—that’s quite an advantage.
In conclusion, it’s perhaps sensible to assess the landscape carefully before diving into NuScale Power. It’s advisable to do thorough research, just like any smart investor would.
