The company has been posting losses instead of gains and has yet to build a reactor.
But it has ample liquidity to keep it running -- and, hopefully, growing.
Buying into it now could turn out to be a great move.
Meet NuScale Power (NYSE: SMR), an energy company specializing in the development and sale of modular light water reactor nuclear power plants. Its ticker symbol, SMR, stands for small modular reactor, typically able to generate up to 300 megawatts per unit -- around a third of what a traditional reactor would.
The company was recently valued at around $4 billion, and its stock has averaged annual gains of about 17% over the past three years -- though it's down by nearly 24% over the past year.
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There's a lot of interest in nuclear energy lately, especially given the proliferation of energy-hungry data centers facilitating artificial intelligence (AI) processing. And NuScale is the first and only small modular reactor (SMR) developer to receive Standard Design Approvals from the U.S. Nuclear Regulatory Commission (NRC).
That's all very promising, but NuScale has not yet become a highly profitable company, producing many reactors. Indeed, it has been posting progressively larger losses in recent years. It's also facing competition, such as from solar power.
The company's presentation for its first quarter announces that "NuScale is years ahead of the competition," with approved designs, suppliers in place, and capabilities including off-grid operation. It's involved in planning [for the Tennessee Valley Authority] "what would be the largest nuclear power deployment program in U.S. history, which will utilize NuScale technology." In the meantime, it's working on a project in Romania.
So where will NuScale stock be in 10 years? Well, it's really hard to say. If it does build reactors and does become profitable, shareholders could be richly rewarded by 2036. But there could be delays and/or cash crunches and/or rivals eating its lunch. If it succeeds and is generating, say, 10 times its current revenue, its shares may well be worth 10 times as much -- or more -- by 2036. But note that it has diluted its shares by issuing many more -- and if that continues, that will shrink shareholder gains.
Before you buy stock in NuScale Power, consider this:
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Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.