Nuclear energy has entered a renaissance. Through a confluence of factors such as rising electricity demands from data centers, government initiatives, and just plain old realizations that this is the safest and cleanest energy technology that we know of, nuclear energy projects are making a comeback. Some start-ups are trying to take advantage of this trend, and their stock prices are soaring.
Enter NuScale Power (SMR 6.29%) and Oklo (OKLO 4.28%). The two stocks have combined market capitalizations of close to $20 billion, even though both generate barely any (or zero) revenue and continue to lose money. But if you want to bet on nuclear stocks in your portfolio today, which is the better buy: NuScale Power or Oklo stock?
NYSE: OKLO
Key Data Points
New nuclear developments
Both NuScale Power and Oklo aim to disrupt the nuclear energy space, but come at it from different angles.
NuScale Power has designed a small modular reactor (SMR) that has been approved for use by the Nuclear Regulatory Commission (NRC), the only SMR to ever be approved by the agency. SMR technology is explainable by its name: a smaller nuclear reactor that can be scaled up modularly to create larger systems. Each SMR from NuScale Power under its current design can generate 77 megawatts of power. However, none have ever been built as of today, with utilities only exploring potential uses of the system with the company.
Oklo is building what it calls fast-reactor technology that utilizes recycled nuclear fuel, making the process potentially cheaper and more efficient. It is aiming to vertically integrate the supply chain with its own nuclear recycling facility, along with a radioisotopes business. These are disruptive ideas, but the problem remains that Oklo's reactor designs are not approved by the NRC, making all of these business models null for the time being. The company has generated zero revenue in its lifetime.
Image source: Getty Images.
Which stock is a better buy today?
If I had to choose one stock to buy from Oklo or NuScale Power, it would likely be the latter one that makes it into my portfolio. NuScale Power has a smaller market cap, a reactor design approved by the NRC, and a balance sheet with close to $1 billion in cash. Oklo has more than twice its market cap and no approved reactor design, which means it will be many years until it generates revenue (if it ever does). That says nothing about bottom-line earnings or free cash flow.
However, when looking at NuScale Power in a vacuum, it would be hard to argue for reasons for the stock to belong in anyone's portfolio. The company has an approved reactor design but has never won a contract with a utility provider, which should say something about the business model. It is burning a lot of cash and has never generated a profit. SMR technology sounds innovative, but the actual nuclear reactors getting built today are larger or old systems getting refurbished.
NuScale Power looks like a better bet than Oklo, but neither stock belongs in any rational investor's portfolio.
