Could Buying NuScale Power Today Set You Up for Life?

NuScale Power (NYSE: SMR) just got some very good news, but investors haven't seemed to notice. To be fair, that's probably the right response. Here's why only the most aggressive investors should buy NuScale Power despite the huge opportunity that could lie ahead for the company.

What is NuScale Power's business opportunity?

NuScale Power is attempting to build a business selling small modular nuclear reactors, or SMRs. SMRs are an exciting technological advance in the nuclear power industry. Reactors today are massive and built on site, further complicating an already complex technology. SMRs are expected to be built in a factory setting, enabling assembly line-style manufacturing processes. That standardization should help to keep costs down and improve quality.

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Moreover, the small size of SMRs would allow them to be transported to where they are needed and placed closer to population centers. Modern safety technology, coupled with the small size of an SMR, should also enhance nuclear power's safety. And NuScale Power has designed its units to be modular, so they can even be linked together to create a larger power plant. If SMRs gain traction, NuScale Power could have a material market opportunity ahead of it.

NuScale's big win and big problem

The problem is that NuScale Power has yet to manufacture and sell its first SMR for commercial use. At this point, it is just a money-losing nuclear power start-up. That said, it has its first customer all lined up.

RoPower, a Romanian power company, has given the green light to a project that is expected to link together six of NuScale Power's SMRs. However, NuScale's stock barely moved on the news because RoPower still has a big hurdle ahead of it. RoPower's ability to buy NuScale's SMRs depends on securing the funding it needs for the nuclear power plant it wants to build.

In other words, NuScale still doesn't have a deal to sell its first SMR. It needs that sale to prove there is a market for its SMRs and that its business model and technology both work. Until it has done that, this is a high-risk stock that only the most aggressive growth investors should consider buying.

Is NuScale a buy?

Assuming NuScale's business gets up and running, it could be a huge long-term investment opportunity. Getting in early could help set you up for life. The problem is that a positive outcome isn't a given. The technology is unproven, and NuScale's manufacturing ability is untested. Most investors should probably wait until the company has successfully delivered its first SMR before considering an investment here.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.