In recent years, nuclear energy has experienced a resurgence. Around the world, government and corporate stakeholders are increasingly viewing nuclear power as a cleaner, more scalable energy source than past options. The growing need for energy to meet the demand from artificial intelligence (AI) data centers added to this resurgence and sparked huge interest in nuclear power generated by smaller-scale nuclear reactors.
All this led to increased speculation in stocks like NuScale Power (SMR 3.55%) and Nano Nuclear Energy (NNE 3.03%). Both stocks went on a bull run last year, but in recent months, each has experienced a pullback. The volatility is a byproduct of the speculation.
The question now is, between these two nuclear energy stocks, which one has the better opportunity?
Image source: Getty Images.
Still in the early stages
NuScale and Nano Nuclear Energy are both in what's known as the small modular reactor (SMR) business. The U.S. Department of Energy has noted that SMRs have numerous cost and efficiency advantages.
NYSE: SMR
Key Data Points
NuScale focuses on developing permanently installed SMRs. Nano's specialty is microreactors, which offer greater flexibility and modularity for end users. Both companies are still in their early stages.
NASDAQ: NNE
Key Data Points
Investors are valuing each company based on future potential rather than current results. While Nano may be the "smaller" of the two, don't assume this means this company has a greater amount of potential upside.
The stronger choice is NuScale
Currently, NuScale has a market cap of around $6 billion, while Nano's market cap is around $1.75 billion. At first, this may suggest that Nano has greater long-term upside potential. While that's possible, it's also possible that Nano's lower market cap is reflective of greater uncertainty about its future success.
After all, NuScale already has regulatory approval for its reactors and has entered the commercialization stage. Last year, revenue came in at $40 million, with sell-side analysts estimating that sales could more than triple this year.
Barring some game-changing regulatory or commercial partnership news out of Nano, consider NuScale Power the more established of these nuclear start-ups and the stronger choice from a risk/reward standpoint.
