Why Nano Nuclear Energy Stock Just Popped

Source Motley_fool

Key Points

  • Nano Nuclear just bought Secured Transportation Services LLC for $13 million.

  • Its new nuclear materials transport subsidiary has revenue -- and profit.

  • 10 stocks we like better than Nano Nuclear Energy ›

Nano Nuclear Energy (NASDAQ: NNE) stock soared 12% through 11:40 a.m. ET Tuesday after announcing it has just acquired a subsidiary that generates actual revenue -- and is profitable to boot.

Considering Nano Nuclear itself currently generates no revenue, this is pretty big news for the start-up manufacturer of small modular (nuclear) power reactors.

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Mother and son hold hands in a field of flowers outside a nuclear power station.

Image source: Getty Images.

What Nano Nuclear just bought

The company Nano just bought, Secured Transportation Services LLC, specializes in the safe, secure, and compliant (with safety regulations) movement of radioactive and nuclear materials. It's a perfect match for Nano, which is planning to build and transport nuclear reactors and fuel in the future!

The price Nano paid is also pretty nice.

Nano will pay $6 million cash and $7 million in stock for its new subsidiary -- $13 million total. In exchange, it gets a nuclear specialist with 20 years of experience, $7.1 million in annual revenue, and $1.3 million in annual net profit. That works out to a purchase price of 10 times annual earnings, and only 1.8 times sales.

When you consider that Nano itself currently trades at infinity times both earnings and sales, it's an obvious bargain. For that matter, if you look five years into the future, and see S&P Global Market Intelligence forecasting Nano with only $16.3 million in revenue in 2030, but costing nearly $1.6 billion today... well, that means Nano has a very forward price-to-sales ratio of nearly 1,000.

And 1.8x sales today is a lot cheaper than 1,000x sales five years from now.

What it means for Nano Nuclear stock

Beyond just getting a great price, Secured Transportation Services helps Nano become a fully integrated nuclear fuel logistics and transportation company -- not just for itself, but for other players in this industry as well.

Should you buy stock in Nano Nuclear Energy right now?

Before you buy stock in Nano Nuclear Energy, consider this:

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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