Aggressive growth investors understand that to substantially increase their portfolio's growth prospects, they typically must accept greater risk and volatility. As the saying goes, there's no such thing as a free lunch.
The trick is to find the best balance between upside potential and added risk. NuScale Power (SMR +0.96%), a popular nuclear energy stock, could strike the ideal balance. The company is pursuing a multi-trillion-dollar growth opportunity and yet trades at a market cap of just $3.5 billion.
There are reasons for NuScale's discounted valuation. But, that sizable discount may shrink substantially later this year if the company reports positive progress on one critical growth catalyst.
If you're looking to maximize the growth potential of your portfolio, this could be your chance.
NYSE: SMR
Key Data Points
Here's why NuScale Power stock is an ideal choice for aggressive growth investors
NuScale's technology focuses on small modular reactors, or SMRs. Only a few of these miniature nuclear power plants are currently in operation worldwide. However, at least on paper, they are faster, simpler, and cheaper to get online than larger conventional nuclear power plants. That makes them a perfect fit for meeting the AI industry's rapidly rising demand for energy.
Image source: Getty Images.
Experts increasingly expect nuclear power to receive a massive jump in investment over the coming years and decades. But as a report from Goldman Sachs warns, "the next nuclear age will look different from the last." Conventional nuclear power plants will still receive plenty of investment, perhaps even the majority. But relatively untried approaches like SMRs will also see plenty of interest and adoption. Goldman Sachs reports:
SMRs use the same fission reaction as traditional nuclear plants but utilize different reactor designs for a smaller footprint and better safety features. With only three operational SMRs in the world (in Russia, China, and Japan), SMRs are still several years away from commercializing at scale. However, investor interest has been growing, driven by the conviction that nuclear energy will be crucial to powering ambitions in AI.
Investors looking to bet on SMR adoption should take a strong look at NuScale. NuScale is currently the only company approved by U.S. regulators to build an SMR system, though many other companies are currently in the approval process. NuScale also has several major customers in its project pipeline, headlined by a 6-gigawatt system ordered by the Tennessee Valley Authority, a major U.S. utility.
The question isn't whether SMR systems are a good fit for AI's rising power needs. Nor is there uncertainty regarding NuScale's ability to get an SMR system approved by regulators and then ordered by customers. Instead, the issue plaguing NuScale stock right now is execution risk.
In 2024, NuScale faced the cancellation of a major SMR project. Industry experts were pessimistic about the company's future, as well as the future of SMR technology in general. "Although there were problems specific to that project, the financial challenges and cost trends witnessed in this case will afflict any small modular nuclear reactor project," reported UtilityDive at the time. "In a rational world, no utility or government would invest another dime on these theoretical reactor concepts."
On paper, NuScale has huge upside potential, and a major catalyst in the form of a signed power purchase agreement for its Tennessee Valley Authority project could arrive by the end of the year. But the market is clearly pricing a lot of caution into NuScale stock. That could spell opportunity for aggressive growth investors.
