Author: The INO.com Team

Fed Rate Cuts Fuel Gold’s Rise: How to Play the Rally

Posted on by The INO.com Team

The recent Federal Reserve rate cut of 50 basis points has sparked a surge in gold prices. Gold, which reached a record high of $2,635.29 per ounce on Monday, has risen nearly 29% year-to-date. This surge has significantly boosted the appeal of gold as an attractive asset for investors.

Investors often turn to gold during uncertain times, as it is a safe-haven asset. The inverted yield curve, where short-term bond yields are higher than long-term yields, has added to recession fears, pushing more investors toward gold. In volatile markets, gold offers a way to diversify portfolios, protect against inflation, and hedge against broader market risks.

To play this rally, investors can look at gold ETFs such as SPDR Gold Shares (GLD) and VanEck Gold Miners ETF (GDX), which provide exposure to gold prices and gold mining companies, respectively. Additionally, stocks like Newmont Corporation (NEM) and Franco-Nevada Corporation (FNV) are well-positioned to benefit from gold’s continued rise, making them solid options for those looking to tap into the ongoing gold rush.

ETFs to Buy:

SPDR Gold Shares (GLD)

GLD is a popular exchange-traded fund (ETF) that aims to reflect the performance of the gold bullion price before fees and expenses, offering investors a way to track the value of gold without physically holding it. Managed by World Gold Trust Services, LLC, GLD invests primarily in gold, making it a convenient and efficient vehicle for those seeking exposure to the commodity market. It can be used as a short-term position to hedge against equity market volatility and inflation.

As of September 24, 2024, the fund had assets under management (AUM) of $74.32 billion and an NAV of $243.58. GLD has an expense ratio of 0.40%, which is lower than the category average of 0.48%. Its fund inflows came in at $4 billion over the past three months and $759.19 million over the past year. Also, the ETF has a beta of 0.11, indicating comparative stability than the broader market.

In terms of price performance, the ETF has surged nearly 38% over the past year and more than 28% year-to-date.

VanEck Gold Miners ETF (GDX)

GDX seeks to replicate the performance of the NYSE Arca Gold Miners index before fees and expenses. The non-diversified fund usually invests 80% of its total assets in depositary receipts and common stocks of the gold mining industry, thereby delivering an ‘indirect’ exposure to gold prices.

With $15.95 billion of total net assets, GDX’s top holdings include Newmont Corporation (NEM) with a 15.25% weighting, followed by Agnico Eagle Mines Limited (AEM) at 10.05%, and Barrick Gold Corporation (GOLD) and Wheaton Precious Metals Corp. (WPM), at 8.69% and 6.89%, respectively. It currently has 59 holdings in total.

The fund pays an annual dividend of $0.50, translating to a 1.21% yield at the prevailing price level. Its dividend payouts have grown at an impressive CAGR of 38.1% over the past three years and 36.6% CAGR over the past five years. Also, the fund’s four-year average yield is 1.32%.

Over the past five days, GDX’s fund inflows were $104.35 million and $438.16 million over the past month. In addition, its 0.51% expense ratio compares to the 0.48% category average. The ETF’s NAV was $41.24 as of September 24, 2024. Moreover, it has gained more than 43% over the past year and nearly 34% year-to-date. Also, it has a beta of 0.99.

Stocks to Buy:

Newmont Corporation (NEM)

Newmont is the world’s leading gold mining company and a producer of other precious and industrial metals, including copper, silver, zinc, and lead. NEM has the largest gold reserve base in the metals mining industry, underpinned by its world-class ore bodies in top-tier locations.

NEM’s sales increased 64.1% year-over-year to $4.40 billion for the fiscal second quarter that ended June 30, 2024. Its net cash from operating activities rose 112.5% from the prior-year quarter to $1.39 billion. NEM’s adjusted net income came in at $834 million and $0.72 per share, representing 213.5% and 118.2% year-over-year improvements. Also, its adjusted EBITDA stood at $1.97 billion, up 116% year-over-year.

During the quarter, NEM produced 1.61 million attributable ounces of gold and 477 thousand gold equivalent ounces (GEOs) from copper, silver, lead, and zinc. This growth was largely driven by the production of 1.31 million gold ounces from Newmont’s Tier 1 Portfolio.

Analysts expect NEM’s revenue for the third quarter (ending September 2024) to increase 86.2% year-over-year to $4.64 billion, while its EPS is expected to improve 121.9% from the year-ago value to $0.80 in the same period. In addition, it topped the EPS and revenue estimates in three of the trailing four quarters, which is impressive.

NEM’s stock is already up more than 65% over the past six months and has returned nearly 35% year-to-date.

Franco-Nevada Corporation (FNV)

Headquartered in Toronto, Canada, Franco-Nevada operates as a gold-focused royalty and streaming company with a presence in South America, Central America, Mexico, the United States, Canada, and internationally. Operating through the Mining and Energy segments, it manages its portfolio primarily focusing on precious metals, including gold, silver, and platinum group metals.  

On August 13, the company declared a quarterly dividend of $0.36 per share payable to its shareholders on September 26, 2024. With a four-year average dividend yield of 0.93% and the current dividend of $1.44 translating to a 1.12% yield, the company continues to provide consistent returns to its investors. Also, it has a payout ratio of 42.2%.

During the fiscal second quarter, which ended June 30, 2024, FNV reported total revenues of $260.10 million and a gross profit of $178.10 million. The company achieved an adjusted EBITDA of $221.90 million, with a margin of 85.3%, compared to an adjusted EBITDA margin of 83.5% in the prior-year quarter. FNV’s adjusted net income came in at $144.90 million and $0.75 per share in the same period. Also, its cash and cash equivalents at the end of the period stood at $1.44 billion, up 11.1% year-over-year.

Street expects FNV’s revenue and EPS to reach $1.13 billion and $3.32, respectively, in the current year ending December 31, 2024. For the fiscal year 2025, its revenue is forecasted to register a year-over-year growth of 13.7%, reaching $1.29 billion. Also, its EPS is expected to come in at $3.87, up 16.3% from the prior year.

The company’s strong growth outlook is driven by mine expansions and new mine starts, with expectations of up to nine new mines contributing from 2024 to 2028. FNV also holds significant long-term optionality in gold, copper, and nickel, with exposure to approximately 66,800 square kilometers of mineral-rich territory.

Moreover, FNV’s shares have gained more than 8% over the past three months and nearly 16% year-to-date.

Bottom Line

The yellow metal’s long-term prospects appear bright as the gold market is expected to rise to 6.32 kilotons by 2029, reflecting a CAGR of 7.4%. Thus, one can capitalize on the surge without holding it physically through gold stocks (such as NEM and FNV) or convenient gold ETFs like GLD and GDX.

Should Investors Steer Clear of Shipping Stocks After FBI Raid?

Posted on by The INO.com Team

The shipping industry is now under scrutiny following a high-profile FBI investigation into Synergy Marine Group. The raid, which occurred in the Port of Baltimore, is linked to the same company’s role in the tragic collapse of the Francis Scott Key Bridge earlier this year, resulting in the deaths of six workers. The U.S. Department of Justice has filed a $100 million lawsuit against Synergy Marine Group, raising serious concerns about the company's operations. And now, federal authorities, including the FBI, EPA’s Criminal Investigation Division, and the Coast Guard, have boarded another Synergy-operated ship, the Maersk Saltoro, for a court-authorized inspection.

As authorities dig deeper into the incident, questions surrounding compliance, infrastructure safety, and potential financial fallout loom large. With ongoing legal battles, regulatory investigations, and a massive infrastructure rebuild expected to last until 2028, the fallout from this incident is far from over.

These developments cast a shadow over the entire shipping industry, as legal and regulatory issues tend to create uncertainties that make investors wary. Moreover, as shipping companies operate on tight margins, incidents like this could lead to stricter regulations, increased scrutiny, and higher operational costs. As Synergy Marine Group grapples with legal and reputational challenges, investor confidence in shipping stocks may falter. Plus, the possibility of similar issues in other companies might prompt a more cautious approach to investing in the sector, at least in the short term.

To regain trust, shipping companies will likely need to prioritize transparency, safety improvements, and risk mitigation. However, these efforts could drive up costs and squeeze profitability across the industry.

Given this backdrop, investors should steer clear of A.P. Møller - Mærsk A/S (AMKBY) but keep an eye on Matson, Inc. (MATX). Let’s evaluate the fundamentals of these stocks:

Stock to Avoid: A.P. Møller - Mærsk A/S (AMKBY)

AMKBY operates globally in the ocean transport and logistics sector, providing a wide range of services, including container shipping, terminal handling, and supply chain management. Despite its robust service offerings, the company has faced significant challenges recently.

For the fiscal second quarter that ended June 30, 2024, AMKBY’s revenue decreased 1.7% year-over-year to $12.77 billion. Its EBIT fell 40.1% from the year-ago value to $963 million, while its profit for the period came in at $833 million, down 43.9% year-over-year. The company’s earnings per share also dipped 40% from the prior-year quarter to $0.51. Also, its cash flow from operating activities amounted to $1.63 billion, indicating a 41% decline from the same quarter last year.

Analysts expect AMKBY’s revenue and EPS for the current year (ending December 2024) to be $53.18 billion and $1.56, respectively. For the fiscal year 2025, both its revenue and EPS are expected to decline by 7.9% and 76.6% from the prior year to $48.97 billion and $0.37, respectively.

Adding to the bleak outlook, shares of AMKBY have declined more than 12% over the past nine months and nearly 8% year-to-date. Given these challenges and declining financial metrics, it may be wise for investors to steer clear of this stock for the time being.

Stock to Watch: Matson, Inc. (MATX)

Matson is a long-established player in ocean transportation and logistics services, founded in 1882. It plays a critical role in connecting the domestic non-contiguous economies of Hawaii, Alaska, Guam, and Micronesia with its fleet of specialized vessels, including containerships and custom-designed barges.

In the second quarter of 2024 (ended June 30), MATX delivered strong financial results, with total operating revenue rising 9.6% year-over-year to $847.40 million. Its Ocean Transportation segment showed even stronger growth, with an 11.8% increase in revenue, reaching $689.90 million. The company’s operating income stood at $109 million, up 32.3% year-over-year, while its net income grew 40.1% from the year-ago value to $113.20 million. Also, its EPS came in at $3.31, up 46.5% year-over-year.

Matson's consistent performance is reflected in its shareholder returns. On September 9, the company paid its shareholders a quarterly dividend of $0.34 per common share, representing a 6.3% increase over the previous quarter. With a decade of consecutive dividend growth, MATX pays an annual dividend of $1.36, yielding 0.98% at current price levels. Its dividend payments have grown at a CAGR of 9.5% over the past three years and an 8.9% CAGR over the past five years.

Street expects MATX’s revenue for the fiscal third quarter (ending September 2024) to increase 16.9% year-over-year to $967.68 million, while its EPS estimate of $4.66 for the same period indicates a 37.2% year-over-year growth. It is no surprise that the company has topped the EPS and revenue estimates in the trailing four quarters, which is excellent.

In terms of price performance, the stock has returned more than 60% over the past year and nearly 30% year-to-date. Further, analysts’ average price target of $148 indicates a 4.5% upside from the last price, making it a stock worth watching for investors seeking solid growth potential and steady returns.

Why MCD’s Pricing Strategy Makes It a Buy

Posted on by The INO.com Team

McDonald’s Corporation (MCD) has once again struck a chord with customers through its clever pricing tactics. The fast-food giant’s $5 meal deal, which was first introduced in May, has turned out to be a big hit with customers feeling the pinch of inflation. Originally planned to run for just four weeks, the deal was so successful that McDonald’s extended it through the summer.

However, the timing of this extension wasn’t accidental. The move came after MCD’s global comparable sales dipped by 1%, and net revenues remained flat compared to the previous year, in the second quarter ended June 30, 2024. The company needed a way to attract more customers, and this budget-friendly bundle turned out to be the perfect solution, with 93% of franchise owners supporting the extension until the end of August.

The bundle, featuring a choice between a McDouble or McChicken, fries, nuggets, and a drink for just $5, became a crowd favorite, with nearly two-thirds of buyers opting for the McDouble. Buoyed by its success over the summer, attracting “tens of millions” of customers, McDonald’s extended the deal once again, this time through December in select U.S. markets.

Joe Erlinger, President of MCD’s USA, stated, “Together with our franchisees, we’re committed to keeping our prices as affordable as possible, which is why we’re doubling down with even more ways to save.”

While the $5 meal deal is certainly a wallet-friendly option, it’s more than just a low price. It’s the company’s calculated response to inflation. As grocery bills and dining-out costs climb, a $5 meal serves as a welcome relief, easing the financial pressure on customers. This strategy is especially targeted at middle-income consumers, a large part of McDonald’s customer base, who typically earn between $48,000 and $65,000 annually.

Moreover, these offers reflect the chain’s commitment to maintaining value, a word that was mentioned nearly 90 times during the company’s most recent earnings calls. And judging by the continued popularity of these deals, it’s clear that customers are “lovin’ it.”

Alongside the value deal, McDonald’s has rolled out a series of other promotions, like $0.50 Double Cheeseburgers on National Cheeseburger Day and $1 10-piece Chicken McNuggets each week. Promotions like free medium fries with any $1 purchase on Fridays, running through the end of 2024, further add to the company’s value-driven approach. These offers aren’t just about saving customers money; they’re also designed to drive more foot traffic into restaurants. The company aims to draw customers in, with the hope they’ll spend more by upgrading their meals or dining with others.

Since the launch of the bundle in late June, McDonald’s has seen a notable increase in in-store visits. Data from foot traffic analytics firm Placer.ai revealed that on the day of the launch, June 25, McDonald’s experienced its busiest Tuesday of the year, with an 8% spike in visits compared to its year-to-date average. Similar trends continued into July, underscoring how well the $5 bundle resonated with consumers.

Does This Move Call for a Price War?

As grocery price inflation shows signs of slowing, more consumers are opting to eat at home. According to the U.S. Census Bureau, restaurant sales increased by 2.7% year-over-year to $94.50 billion in August but remained flat over the last four months. When adjusted for inflation, the sales actually declined by 1.3% compared to August 2023, as reported by the National Restaurant Association.

In this competitive landscape, where consumers hold the power, MCD isn’t the only fast-food chain experiencing increased customer visits. Taco Bell announced a $7 Luxe Cravings Box alongside its $5 Taco Discovery Box and Cravings Value Menu in June. Similarly, Burger King extended its $5 “Your Way Meal” bundle and introduced new items under its “Fiery Menu.” Wendy’s has also joined the fray, offering a $3 breakfast bundle and a $5 combo known as the “Biggie Bag.”

While these promotions may attract short-term traffic, experts caution that they can also set a precedent for consumer expectations regarding discounts. Kristin Lynch, senior director of strategy and analytics at Paytronix, warned, “McDonald’s will have to consider the value associated with their loyalty program.” He believes balancing value and customer expectations is essential, with 166 million loyal members contributing 25% of system-wide sales.

Amid signs of slowing consumer demand, the chain has announced a new store format emphasizing digital kiosks. Some locations are upgrading from traditional menu boards to digital screens designed to showcase promotions and popular items, while printed menus will still be available for those who prefer ordering the old-fashioned way. These enhancements aim to meet the increasing demand for digital options while improving service speed and accuracy.

Bottom Line

As consumers tighten their budgets amid rising prices, fast-food chains are struggling to attract lower-income customers. A recent survey found that nearly 80% of Americans have reduced their fast-food spending because they find it too expensive. In this context, McDonald’s decision to extend its $5 meal deal into winter reflects a strategic response to an ongoing economic struggle that has yet to fully recover.

What started as a summer special has now become an important strategy to bring back budget-conscious diners. This move addresses complaints about rising prices and highlights McDonald’s focus on offering value during tough times. While the company continues to introduce deals, it’s also working on improving its marketing and cutting costs to boost sales.

For investors, MCD’s resilience and ability to adapt its marketing strategies make it a compelling investment opportunity. Therefore, investors could consider scooping up this fast-food giant’s shares, which have returned more than 15% over the past three months. 

Are Chinese EV Stocks a Safe Bet for Growth?

Posted on by The INO.com Team

The electric vehicle (EV) industry is thriving, driven by rising consumer awareness about sustainability, technological advancements, and favorable government policies. According to a report by Mordor Intelligence, the China EV market is estimated at $305.57 billion in 2024 and is projected to reach $674.27 billion by 2029, growing at a CAGR of 17.2%.

So, prominent Chinese EV manufacturers, including Nio Inc. (NIO) and XPeng Inc. (XPEV), are well-poised for significant growth in this rapidly evolving industry. This article will analyze the recent performance of Nio and XPeng, compare their growth with Tesla’s success in China, and assess whether Chinese EV stocks are a prudent investment for growth-seeking investors.

Recent Performance of Nio and XPeng

NIO, a leading global smart EV market company, has demonstrated impressive growth, buoyed by strategic advancements and expanding product lines. Founded in November 2014, NIO has developed full-fledged capabilities for vehicle research and development (R&D), design, manufacturing, sales, and services. Since the launch of its first mass-produced model, the ES8, in 2018, NIO has reached a production milestone of 500,000 vehicles within just six years.

In August 2024, NIO delivered 20,176 vehicles, which consisted of 11,923 premium smart electric SUVs and 8,253 premium smart electric sedans. In 2024, the automaker delivered 128,100 vehicles year-to-date, up 35.8% year-over-year. The company’s core competitive advantages in technology, product, service, and community are earning increasing recognition from users, driving the continued solid vehicle sales performance.

In addition, Nio is positioning itself as a key player in supporting the widespread EV adoption across China. On August 20, the company announced its “Power Up Counties” plan to strengthen its charging and swapping network across all county-level administrative divisions in China, offering a more convenient and efficient power solution for NIO, ONVO, and all EV users.

NIO reported better-than-expected revenue in the second quarter as vehicle deliveries hit record highs. For the quarter that ended June 30, 2024, the company reported vehicle sales of $2.16 billion, an increase of 118.2% from the prior year’s quarter. Its total revenues rose 98.9% year-over-year to $2.46 billion. That compared to the consensus revenue estimate of $2.44 billion. Its gross profit was $232.40 million, up 1,841% from the previous year’s period.

Over the past month, NIO’s stock has surged more than 22%. Further, analysts appear bullish about the company’s prospects. JP Morgan recently upgraded its outlook for NIO from Neutral to Overweight, citing improved cash position and 2025 product pipeline. The firm also raised its price target for NIO shares from $5.30 to $8.

XPEV, another prominent China-based smart EV company, has experienced notable gains, primarily due to its focus on technological innovation and expanding product offerings. XPENG delivered around 14,036 smart EVs in August, an increase of 3% year-over-year and 26% from the previous month.

The company delivered 77,209 smart EVs in the first eight months of 2024, up 17% from the prior year’s period. On August 27, XPENG celebrated its 10th Anniversary Gala Night and officially launched the MONA M03, an intelligent all-electric hatchback coupe, in China. Available in three versions, the MONA M03 is priced between RMB119,800 ($16,900.7) and RMB155,800 ($21,979.3). Its Max version, equipped with the XNGP advanced driver assistance system (ADAS), makes it the world’s first mass-produced vehicle offering high-level ADAS functionality for under RMB200,000 ($28,214.8).

Further, on August 30, the first batch of MONA M03 vehicles was delivered to customers at the Chengdu Auto Show. As the first model marking XPENG’s second decade, the MONA M03 features stylish design, cutting-edge intelligence, and superior drivability, surpassing typical offerings in the above-RMB200,000 ($28,214.8) segment. It represents an affordable new flagship for the AI-driven smart mobility era aimed at younger audiences.

In June, XPEV entered into the Master Agreement on electrical/electronic architecture (E/E Architecture) technical collaboration with the Volkswagen Group. This partnership solidifies both companies’ commitment to jointly develop industry-leading E/E Architecture for all locally produced vehicles based on Volkswagen’s China Main Platform (CMP) and Modular Electric Drive Matrix (MEB) platform. 

Moreover, XPeng’s recent quarterly results reveal accelerated growth in deliveries and revenue, underscoring the company’s effective execution of its strategic initiatives. In the second quarter that ended June 30, 2024, the EV maker posted total revenues of $1.12 billion, an increase of 60.2% year-over-year. Revenues from vehicle sales rose 54.1% year-over-year to $940 million.

Also, the company’s cash and cash equivalents, restricted cash, short-term investments, and time deposits stood at $5.14 billion as of June 30, 2024.

For the third quarter of 2024, XPEV expects deliveries of vehicles to be between 41,000 and 45,000, an increase of nearly 2.5% to 12.5%. The company’s total revenues are expected to be between RMB9.10 billion ($1.28 billion) and RMB9.8 billion ($1.38 billion), representing a year-over-year increase of almost 6.7% to 14.9%.

Shares of XPEV have gained nearly 3.7% over the past five days and more than 30% over the past month. Further, analysts seem bullish about the company’s outlook. BofA Securities analyst Ming-Hsun Lee maintained a Buy rating with a target price of $10.

Comparison With Tesla’s Success in China

Tesla, Inc. (TSLA) has established a formidable presence in the Chinese EV market, leveraging its innovative technology and strong brand recognition. Tesla’s Shanghai Gigafactory has been a significant factor in its success, allowing the company to produce vehicles locally and benefit from cost efficiencies. The Model 3 and Model Y have been well-received, capturing substantial market share in the premium EV segment.

While Tesla’s dominance in China is well-established, Nio and XPeng are rapidly closing the gap. Both companies have demonstrated robust growth trajectories, with Nio expanding its model lineup and enhancing its technology offerings, while XPeng focuses on integrating advanced autonomous driving features. Despite Tesla’s head start, NIO and XPEV’s increasing market share reflects their growing competitiveness in the Chinese EV market.

Bottom Line

Nio and XPeng have emerged as strong contenders in the Chinese EV market, showcasing impressive growth and technological innovation. While Tesla remains a formidable competitor, the expanding market and supportive government policies present significant opportunities for these Chinese EV manufacturers.

With NIO’s strong sales momentum, advancements in battery swapping technology, and XPEV’s financial strength and strategic partnerships, these EV stocks could be ideal investments for potential gains.

Is NuScale Power’s 120% Surge Sustainable?

Posted on by The INO.com Team

Nuclear power is on the brink of a transformation, thanks to the development of small modular reactors (SMRs). These innovative designs aim to make nuclear plants smaller, simpler, and easier to construct, which could play a crucial role in the shift away from fossil fuels. With the demand for clean electricity rising, driven by advancements in artificial intelligence, manufacturing, and electric vehicles, SMRs are gaining attention as a promising solution.

What makes SMRs unique is their small size, 300 megawatts or less power capacity, about a third of the size of traditional reactors. The goal is to build them like an assembly line, with parts made in factories and then put together on-site. However, there are still major challenges in getting the first SMR up and running in the U.S., and they likely won’t be commercially available until the 2030s.

But that didn’t stop the nuclear companies from being bullish, and NuScale Power Corporation (SMR) is one of the companies developing this technology. Shares of SMR have rallied 119.3% over the past six months. Moreover, this hot nuclear stock is up more than 215% this year. But is this surge sustainable? Let’s find out.

NuScale Is at the Forefront of SMR Technology

With over $1.8 billion invested since 2007, NuScale’s reactors are designed to generate up to 77 megawatts of electricity per module. These modules can be combined, allowing a single plant to produce as much as 924 MW. What makes this design stand out is its flexibility; the reactors are pre-fabricated, transported, and assembled on-site, significantly cutting down both construction time and costs.

These reactors are incredibly versatile, making them ideal for powering remote areas, industrial plants, or energy-intensive data centers, which are expected to account for 8% of U.S. power demand by 2030. As companies strive to meet carbon-neutral goals, SMRs could play a key role in reducing reliance on fossil fuels while delivering the efficiency of nuclear power.

NuScale’s technology has certainly attracted attention. Last year, Standard Power announced plans to build two SMR-powered facilities in Ohio and Pennsylvania, aiming to generate 2 gigawatts of clean energy for local data centers (expected to be operational by 2029).

However, it’s not all smooth sailing for NuScale. A major project to deploy SMRs in Idaho was canceled after inflation and rising interest rates caused costs to skyrocket from $5 billion to $9 billion. This led to the Utah Associated Municipal Power System (UAMPS) pulling the plug on the Carbon Free Power Project, which had been in the works since 2015. Initially estimated at $3 billion, the project’s costs ballooned to $9.3 billion by 2023, making it too expensive to continue. As a result, NuScale had to take a $50 million charge.

On the regulatory side, NuScale is proud to be the only company with a Standard Design Approval from the Nuclear Regulatory Commission. However, this approval covers its older 50 MWe reactors, not the current 77 MWe models, which the company expects to be approved by July 2025.

Despite the Carbon Free Power Project setback, NuScale’s President and CEO, John Hopkins, remains optimistic. During the Q3 earnings call, Hopkins emphasized that the company is focused on deploying its SMR modules and is “poised to expand into new markets, applications, and capabilities.”

He also highlighted upcoming projects, such as plans to develop two VOYGR-12 power plants, providing nearly 2 GW of clean energy to power data centers in Ohio and Pennsylvania. This green light pave signals a big step toward commercializing NuScale’s cutting-edge technology. Moreover, with agreements to deploy its reactors in key international markets, NuScale is set for solid growth as global demand for clean, reliable energy rises.

Should You Invest in NuScale Power Right Now?

While NuScale Power shows a lot of promise, it’s important to remember that the company is still in its early stages and not yet profitable. Over the past three years, NuScale has heavily invested in research and development to bring its small modular reactors (SMRs) to market. In the last 12 months, the company reported a net loss of $82 million, with a quarterly cash burn rate estimated at $20 million.

For the second quarter (ended June 30, 2024), SMR posted nearly $1 million in revenue but a significant net loss of $74.44 million, compared to $5.79 million in revenue and a $29.73 million loss during the same period last year. Its loss from operations also stood at $41.88 million, down from $56.12 million recorded in the prior year’s quarter.

The company holds $130.93 million in cash, enough to last about six quarters. However, if it continues losing money, it may need to raise capital through debt or equity, which could dilute existing shareholders.

On the bright side, governments worldwide are increasingly prioritizing clean energy, and NuScale could stand to benefit from rising investments in nuclear power. With its stock trading at $10, it might seem like an attractive entry point for investors hoping to ride the clean energy wave.

However, it’s important to stay cautious. While deals like the one with Standard Power are promising, they are still potential contracts, and things can change, as seen with the terminated UAMPS deal. Plus, NuScale is still quite far from being commercially operational and awaits approval for its updated reactors. Given the uncertain path to profitability, it could be wise for investors to keep an eye on this stock and see how the story unfolds before jumping in.