Shares of NuScale Power (NYSE: SMR) surged as much as 12.3% in trading on Tuesday as the market continues to push nuclear energy stocks higher. Shares gave back some of those gains late in the day, but were still up 7.4% at 3:30 p.m. ET.
Over the past few weeks, tech and energy companies have come together to provide a bullish view on the future of nuclear energy. Microsoft and Constellation Energy announced the restart of a reactor on Three Mile Island, Oracle's CEO said the company will build three small reactors at a data center, and Constellation's CEO said artificial intelligence (AI) won't happen without nuclear energy.
There's clearly momentum behind the industry, which is driving stock prices higher right now. But will the industry deliver profits to justify rising stock prices?
The challenge for investors buying nuclear stocks today is the technology's potential is years and potentially decades away. Three Mile Island won't open until at least 2028, and it's not clear when small modular reactors will be available.
If you look at NuScale's revenue and free cash flow, there are not a lot of business operations to back up the rising value.
I think nuclear energy could potentially provide value in the future, but its economic value for investors has been questionable for more than a decade. And until we see some more certainty I'm going to sit out this move into nuclear energy stocks.
Before you buy stock in NuScale Power, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and NuScale Power wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $712,454!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of September 23, 2024
Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy, Microsoft, and Oracle. The Motley Fool recommends NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.