NuScale Power Stock Is Cheap, but Does That Make It a Buy Now?

Shares of nuclear power start-up NuScale Power (NYSE: SMR) got caught up in the excitement around nuclear power. Its stock rallied strongly, but Wall Street's attention waned. Now, just a short while later, the shares have fallen 75% from their 52-week high. The stock looks cheap compared to its recent highs, but is it worth buying?

NuScale Power has attractive technology

NuScale Power has a regulatory-approved small modular nuclear reactor (SMR) design. It basically took existing nuclear power technology and downsized it, adding more modern safety features along the way. The reactors can be built in a factory, moved relatively easily to their intended locations, and strung together to create a larger power plant. The one thing that the company doesn't have is a first customer.

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That's a big problem because, until NuScale Power builds and sells its first SMR, the positives noted above about the technology remain theoretical. The company needs to prove that it can build its reactors and that they are reliable. The only way it can do that is by getting a customer to officially sign on the dotted line, so to speak. So far, none have done so.

NuScale Power has irons in the fire

It isn't that NuScale isn't trying to sell its SMRs. It has been working with a foreign power company, and it has an agreement with U.S. companies to potentially provide them with SMRs, too. But neither of these efforts has yet produced a concrete sale.

Notably, NuScale is ready to move when the time comes. It has placed early orders for long-lead-time parts for up to 12 reactors. That way, when it gets its first order, it can hit the ground running. There are positive signs that this will, eventually, happen. For example, the U.S. government has expressed support for SMRs and even provided funding to advance the technology.

NuScale is actually working with one of the utilities that is slated to receive government assistance. That's good news, but until there's an actual sale, NuScale Power will remain a risky start-up with untested technology.

A huge opportunity, but only for aggressive investors

If NuScale Power's SMR technology takes hold, it could be a very attractive growth stock. Notably, it is a manufacturing business, so the opportunity could have a very long runway given the increasing demand for electricity from technologies like artificial intelligence and electric vehicles. However, the steep price decline shows the risks that investors need to shoulder if they buy the stock. Yes, it looks much cheaper than it did, but the risks are no smaller today than they were before the drawdown. Most investors should probably stay on the sidelines until NuScale Power completes its first SMR sale.

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.