Here's Why NuScale Power Stock Is a Buy Before August

NuScale Power (NYSE: SMR) has been a volatile stock since its public debut three years ago. It initially dazzled investors with the disruptive potential of its small modular reactors (SMRs), which could reduce the costs and time required to build new nuclear power plants, but the abrupt cancellation of a major nuclear reactor project in Idaho in 2023 rattled the bulls.

But over the past 12 months, NuScale's stock price more than quadrupled as some major catalysts appeared. Let's see why its stock skyrocketed, and why it could still be worth accumulating ahead of its next earnings report in early August.

Why did the bulls rush back to NuScale's stock?

NuScale's SMRs, which can be installed in vessels that are only nine feet wide and 65 feet high, are prefabricated, delivered, and assembled on site. That modular design allows them to be installed faster and in areas that aren't suited for traditional nuclear reactors.

Image source: Getty Images.

In 2023, NuScale received a Standard Design Approval (SDA) from the U.S. Nuclear Regulatory Commission (NRC) for its SMRs, which can generate up to 50 megawatts of electricity. That made it the only SMR maker with an NRC design approval, and it originally planned to build those 50 MWe SMRs for its NuScale–UAMPS Carbon Free Power Project (CFPP) in Idaho.

However, it canceled its Idaho project in late 2023 after years of skyrocketing expenses. It also found that its reactors couldn't be more cost-effective than comparable coal-fired plants without generating at least 77 megawatts of electricity.

So, as NuScale's Idaho project fizzled out, it submitted a new application for an SDA for a 77 MWe design. That design, which was approved in early June, should finally clear the way for its first firm orders for new modular reactors in the U.S. market. The first VOYGR-6 SMRs will combine six of its 77 MWe modules to generate 462 MWe, while its future VOYGR-12 SMRs will chain together 12 of its 77 MWe modules to generate 924 MWe.

How much bigger could NuScale grow?

NuScale still generates most of its revenue from Romania's RoPower, where it works as a subcontractor for Fluor (NYSE: FLR) in its development of a 462-MWe VOYGR-6 SMR. The contract for the first phase of that front-end engineering and design (FEED) project was signed in December 2022, while the contract for its second phase was signed last July. This project is expected to receive a final investment decision (FID) in 2026, which should pave the way for the construction of the actual plants and boost its overseas revenue.

As that happens, NuScale's U.S. business could flourish again as more projects use its VOYGR-6 SMRs. That growth could be driven by its active discussions with five hyperscale data center operators in the U.S.; the ADVANCE (Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy) Act, which was passed with bipartisan support in July 2024; and the Department of Energy's $900 million deployment of cost-shared funds to accelerate the development of SMRs.

The soaring energy needs of the cloud and artificial intelligence (AI) markets should support that rapid expansion. Its supply deal with South Korea's Doosan Enerbility for SMR components, which started two years ago, should help it scale up its business to meet those rising demands.

According to Precedence Research, the global SMR market could grow at a CAGR of 8.9% from 2025 to 2034. But from 2024 to 2027, analysts expect NuScale's revenue to surge at a CAGR of 118% from $37 million to $384 million as its fledgling business finally blooms.

With a market cap of $5.2 billion, NuScale isn't cheap, at 14 times its projected sales for 2027. It's still issuing new shares and won't turn a profit anytime soon, but it still held $521 million in cash, cash equivalents, and short-term investments at the end of its latest quarter.

Why should you buy NuScale's stock before its next earnings report?

NuScale is still a highly speculative stock, but plenty of catalysts could drive its shares higher. It could also announce more support for its SMRs in Romania and the U.S. and provide a clearer roadmap during its next earnings report in early August. So if you expect the SMR market to gain more momentum, it's smart to accumulate some shares today.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.