Nano Nuclear Energy Is Still Way Under $45. Here's Whether Long-Term Investors Should Pounce.

Nano Nuclear Energy (NASDAQ: NNE) is an advanced nuclear company whose ambitions coincide with a new trend on Wall Street: small modular reactors (SMRs), or, as Nano calls them, microreactors.

Long overshadowed by Oklo and NuScale Power, Nano's cheaper market valuation and regulatory progression has been drawing attention to Nano's suite of reactor designs. The stock has been gaining momentum over the last month, in spite of no real change to the obstacle stymieing its progress: a lack of regulatory approval.

With a market cap of $1.3 billion and a price between $26 and $27, should long-term investors take advantage of this opportunity, or should they wait for more concrete progress?

Let's take a look.

Nano's opportunity is enormous, but so is the wait

Nano Nuclear is one of the most ambitious novel nuclear energy companies in operation today.

Its goal, aside from certifying its microreactor designs, is to build a vertically integrated nuclear business. That means not just constructing and deploying microreactors but also participating in fuel fabrication and transportation, as well as other parts of the nuclear supply chain.

If it can pull it off, the company's business could look a bit like this: It will deploy microreactors wherever they are needed, whether that's a data center in a rural area, a military base, or even a lunar or deep-sea operation. Revenue could eventually come from selling the electricity generated by these reactors, likely under long-term purchase agreements (PPAs) with customers.

Image source: Getty Images.

Although microreactors have yet to be deployed at scale, companies are already biting. In May, Super Micro Computer (NASDAQ: SMCI) signed a memorandum of understanding (MOU) with Nano to explore the integration of microreactors with the former's AI infrastructure. That isn't, to be sure, a commitment to buy. But the early partnership demonstrates how interest in this technology could readily expand to other contracts once Nano's designs are certified.

On that front, Nano expects to begin construction of its first KRONOS micro modular reactor (MMR) in the second half of 2027. This, however, depends entirely on a smooth progression of regulatory approvals. The reactor is planned for construction at the University of Illinois Urbana-Champaign, about a hundred miles from the site of the first nuclear reactor in the U.S., the Chicago Pile-1 at the University of Chicago.

Nano has minimal revenue, but a substantial cash and equivalents pile of about $569 million. Even if it burned through $100 million a year -- currently more like $30 million to $40 million -- it could last five years without needing a fresh injection.

Recently, an analyst at Roth Capital set a $45 price target, implying roughly 73% upside from today's $26-ish price.

Nano has the potential to become a significant supplier of electricity, but that potential could take a decade or more to manifest. By that time, the energy landscape could look very different, perhaps to the point of diminishing Nano's most exciting prospects now. Given the uncertainty, this is still a stock for aggressive investors, those who want to take a calculated risk investing in a nascent industry. Those with less risk tolerance may want to look at a nuclear energy exchange-traded fund (ETF) with Nano as a holding.

Steven Porrello has positions in Nano Nuclear Energy, NuScale Power, and Oklo. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.