What to Know Before Buying NuScale Power Stock

Have you heard the buzz surrounding NuScale Power (NYSE: SMR) and want to find out for yourself what the big deal is? Keep reading. Although this shouldn't be the end of your due diligence, these three highlights will at least get you moving in the right direction.

1. NuScale is working on clever nuclear power technology

Until roughly a decade ago, nuclear power was being phased out. Then new materials, know-how, and sheer need rekindled interest in this clean and reliable source of energy.

There's a twist with nuclear's next chapter, though. Many of these power plants are intended to be small modular reactors (or SMRs), built and operated where their power is to be consumed. Artificial intelligence (AI) data centers, desalination plants, iron smelting facilities, and refineries are all prime candidates for small-scale nuclear power. To this end, Mordor Intelligence believes the worldwide SMR market is poised to triple in size between now and 2030.

Image source: Getty Images.

NuScale Power's sole focus is on the development, construction, and operation of SMRs. Its power plant design, in fact, is the first and (still) only small modular reactor design to win the approval of the United States' Nuclear Regulatory Commission.

2. But NuScale is not alone in this space

NuScale may be positioned to be the first to the U.S. market, and at least one of the earliest to the market overseas. It's not the only name in the nascent small modular reactor space, though. BWXT (NYSE: BWXT), X-Energy, Kairos Power, and Nano Nuclear (NASDAQ: NNE) are just some of the other smaller outfits directly or indirectly working on similar technology.

Perhaps the biggest threat to NuScale Power's future, however, is the bigger and better-funded companies inching their way into this space. Rolls-Royce (OTC: RYCE.F), GE Vernova (NYSE: GEV), and Holtec International are also developing SMR technologies, and these companies have the name as well as the fiscal wherewithal to see them fully developed without needing to raise funds in the meantime. It's conceivable that one or more of these rivals could beat NuScale to the market, if not buy their way to the front of the line.

3. Real revenue is years away, with profits even further down the road

Finally, while the tech likely works as intended, building even a small nuclear power plant takes years of planning and permitting, and then years of construction. If all goes as well as hoped with its inaugural project in Romania, as well as with its recent agreement to supply the Tennessee Valley Authority with up to 6 gigawatts' worth of SMR-supplied electricity, meaningful commercial revenue could be flowing somewhere around 2030, give or take. Just bear in mind that revenue isn't the same as profits.

Also, remember that both of these agreements -- neither of which is absolutely ironclad -- will require government regulatory oversight of the construction of these facilities. As such, the journey to real revenue could end up taking far longer than is currently anticipated. And nothing works against a stock's value like taking too long to pan out.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BWX Technologies. The Motley Fool recommends Ge Vernova, NuScale Power, and Rolls-Royce Plc. The Motley Fool has a disclosure policy.