NuScale Power (SMR -6.52%) is a $10 nuclear stock with a $10 trillion market opportunity in front of it.
NYSE: SMR
Key Data Points
That figure comes from a Bank of America report which projects that nuclear energy could represent a $10 trillion global investment over the next 25 years. More importantly, it predicts that small modular reactors (SMR) will become one of the most consequential energy technologies over the next two decades.
SMR technology is NuScale's bread and butter, and to date, it is the only U.S. company with an SMR design approved by the NRC. That gives it a leg up on competitors and has enabled it to pursue SMR projects in the U.S, including a potential 6-gigawatt SMR deployment program with Tennessee Valley Authority (TVA) and ENTRA1 Energy.
Image source: The Motley Fool.
At roughly $10 per share, NuScale carries a $3.6 billion market cap. If the stock were to grow tenfold to $100 over the next 10 years, NuScale's market valuation would be about $36 billion before factoring in future dilution.
That's pretty aggressive, but not inconceivable. For example, TVA's 6 GW deployment program would require about 72 NuScale SMR modules. If each of those modules sold for $100 million -- which is a figure for illustrative purposes only, not a company-disclosed number -- then 72 modules would equal about $7.2 billion in revenue.
NuScale's commercial partner, ENTRA1, still needs to ink a binding power purchase agreement with the TVA before this potential 6 GW deployment can start to look like a commercial reality. So, it's not guaranteed revenue yet. Still, if NuScale can see this project to the finish, and add one or two other large-scale deployments, then a tenfold gain in its market value would start to look more realistic.
A $100 NuScale share is still a bull-case scenario, but if the next decade can turn NuScale's NRC-approved reactor into a scalable product, a $36 billion valuation might not look so far-fetched in 2036.
