Bold Prediction: NuScale Power Is About to Break Out
Key Points
NuScale's stock has dropped over 80% in the past 12 months.
The company's largest shareholder, Fluor, fully exited the company this year.
NuScale's SMR design was the first to receive approval from the Nuclear Regulatory Commission.
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It's been a wild ride for NuScale Power (NYSE: SMR) investors, but there could be one catalyst on the horizon that leads to a breakout and an end to the boom-and-bust cycle.
NuScale's project, a 6-gigawatt small modular reactor (SMR) system for the Tennessee Valley Authority, a major utility operator, could imminetly receive a power purchase agreement (PPA). This is according to CEO John Hopkins, who has implied that the company would have a PPA by the end of 2026.
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A signed PPA would lock in revenue for NuScale from a utility company for years or even decades to come. This would be welcome news for NuScale, which has suffered several meaningful setbacks this year.
The bad news for NuScale has included the exit of its largest shareholder, Fluor, as well as a $507.4 million milestone payment to commercialization partner ENTRA1 Energy. Delays in project timelines and skyrocketing operating losses amid declining revenue are prompting investors to head for the exit.
A class action lawsuit was also filed against NuScale for allegedly misleading investors on ENTRA1's capabilities and experience.
Image source: The Motley Fool.
With all that said, AI-related power demand has been a boon for nuclear energy, and NuScale's SMR design was the first to receive full approval from the U.S. Nuclear Regulatory Commission (NRC). It still has a real first-mover advantage in a competitive industry.
The risks are not small with NuScale, but the upside potential is substantial. NuScale plummeted 81% over the past 12 months, and now investors can scoop up the stock for a very reasonable price. For long-term investors bullish on this new age of nuclear power, NuScale's stock is trading near its 52-week low, at just under $9 per share as of this writing.
That price, along with the potential for a positive update in next month's earnings release, might make a risk-loving investor jump in.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
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