NuScale Power (SMR 2.91%) is a nuclear technology company trying to change how we build nuclear power plants. In simple terms, it wants to build small nuclear reactors that can be produced in a factory. In practice, several of these reactors can be grouped together to generate larger amounts of power. The company's technology could serve a range of applications, but the most talked-about use case right now is data centers.
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Data centers have a real need for the kind of 24/7 electricity that small modular reactors (SMRs) can produce. Several nuclear start-ups are vying to become the go-to power source for artificial intelligence, including Oklo and Nano Nuclear Energy, but so far, NuScale is the only U.S. company with an NRC-approved SMR design.
Even so, NuScale hasn't deployed an SMR for commercial use. The company is burning cash and reporting losses, and, by the looks of it, it may be a few years before the company generates significant revenue.
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NuScale stock carries a $4.5 billion market cap, which dwarfs its roughly $64 million in trailing-12-month revenue. At today's price, the nuclear stock trades at more than 70 times sales, which is expensive by any conventional measure.
NYSE: SMR
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A $500 investment in NuScale at this point is best reserved for investors who can stomach volatility. The company has long-term potential to meet surging demands for electricity. But it needs to prove it can turn its design into real projects.
Investors who can tolerate risk may want to stake $500 in this burgeoning energy company. Those who want exposure to nuclear energy but don't want to bet it all on one name may be better served by a nuclear energy exchange-traded fund (ETF).
