Porter Stansberry knows at least one thing with absolute certainty: Using high-profile politicians in your teaser ads gets attention, and attention is the goal of every marketer.

This time it’s Barack Obama in the headlines, with subject lines like “Obama Leaked Classified Documents” and “Obama was a Royal Screw-Up”, and that’s likely to either make you want to argue with Porter, if you’re a fan of that former president, or pump your fist and say, “yeah, finally someone agrees with me!” … which means, of course, that half of the marketer’s job is already done. He’s got your attention… and if you happen to also be angry at President Obama, which wouldn’t be surprising given the target market (investment newsletters have traditionally been consumed mostly by men near retirement age, a group which skews very Republican), he’s also on his way to earning his way into your trust. I have no idea what Porter might actually believe, as an individual — like many people in the upper tax brackets, he seems to have grown more libertarian as he’s gotten older and wealthier — but that doesn’t really matter, tapping into political anger has been a keystone of Agora and Stansberry marketing pitches for decades.

So what’s Porter pitching now? Here’s the lead-in to his latest promo “documentary”…

“Barack Obama was a royal screw-up.

“During his first year in office, he leaked the location of a secret energy grid in a memo to Congress.

“The list was exploited by WikiLeaks, whose founder now faces 175 years in prison for spying charges.

“However, thanks to one of my contacts, I’ve managed to obtain a copy of this leaked memo.

“It talks about a network of 93 energy facilities that have the ability to power our entire country with zero emissions.”

And, of course, the promise that there’s some wealth behind this “screw-up”…

“And what happened on February 21, 2023 that could make early investors in this secret energy grid billions of dollars in new wealth?

“I’ve produced a new documentary with all the details.”

And whaddya know, the actual “documentary” pulls in another revered/hated name from politics… here’s the headline once you click through:

“Reagan’s Final Premonition

“On February 21, 2023 his vision became a reality when the U.S government approved a new technology that could fuel our entire country with zero emissions…

“And one company has a virtual monopoly on its production”

The ad starts as so many do, “this is one of the biggest, sure-thing investments of my 25-year career,” and it gets a bit long-winded… but here are some of the tidbits that we can chew on as “clues” in our search for Porter’s favorite new investment (he didn’t provide a transcript for this one, so I’m paraphrasing… but I think I’ve got the details right):

It’s all about a “secret energy grid” that’s poised to power every community in America, based on a technology that “for the first time ever” is about to become scalable.

93 secret power facilities, and the technology is all our country needs to move away from fossil fuels forever… but most people don’t know it exists. The regulation and technological barriers are being lifted, and Porter cites that February 21 publication in the Federal Register as the point where that really picked up steam.

The Obama link is that Porter says that former president accidentally revealed the location of those 93 facilities in a memo to Congress, including the details about their operations. I have no idea what the background of that story is, but what Porter is talking about is nuclear power plants — there are 93 nuclear reactors in the United States, at 55 different locations (or there were at the end of 2021, at least, the number doesn’t change all that quickly).

And Porter says that both for strategic reasons and because of the embedded interests of the fossil fuel industry, everybody wants this technology to be secret… but with this new scalable nuclear technology, it won’t remain secret for long. The big money is moving in, with lots of new investments being made, and he thinks it will grow.

Diablo Canyon is the power plant that Porter highlights in the presentation, as a key indicator of how important California is as a leader, and how reliant California is on Diablo Canyon, which he says is one of the great gifts Reagan gave America. Which I guess is partially true, Diablo Canyon was one of the many nuclear power plants authorized and under construction from the late 1960s through the 1970s, so it was really built under a series of presidents (LBJ, Nixon, Ford and Carter), but it was also a political hot potato for most of that time, and it only got its permanent operating license in the mid-1980s, under President Reagan (that timeline hasn’t changed much, incidentally, the one new large nuclear power plant under construction in the US right now, in Georgia, has been in development and litigation for more than a decade). As a facility that has been operating for about 40 years, Diablo Canyon is almost exactly “average” among American’s nuclear power plant fleet… and that fleet has been shrinking for about ten years, as the first wave of those 1960s plants have reached the end of their lives and been decommissioned (there have been only two new nuclear power plants authorized in the US over the last 30 years or so).

So what’s the new technology? It’s a nuclear reactor that Porter says can power 10,000 homes, but be built in 72 hours… and it’s got a guaranteed customer in the US military, and is the best way to get in on the ground floor of the “nuclear energy revolution.”

Well, no surprise, what Porter’s talking about are small nuclear reactors — what are usually called Small Modular Reactors, which look nothing like the giant cooling towers we imagine when we conjure up a nuclear plant like Three Mile Island or Homer Simpson’s workplace… here’s how Porter sums up the advantages:

Three of these SMRs are already in operation, and dozens are planned, we’re told… and Porter says that we’re on the verge of being able to provide nuclear power to anyone, anywhere, at any time.

So what’s the story? Porter says specifically that he’s NOT telling us to rush out and buy NuScale Power (ticker SMR), which is the most obvious “story” stock in the small nuclear reactor space and was the one that got approval for its reactor design on February 21. He thinks it’s not ready, because it doesn’t have enough money to really start building, and until they get the money we’re still many years away. Don’t buy the stock until then, Porter sez, buy this:

“I’ve found a far better way to capitalize on the emergence of small nuclear reactors in America. Another company is actually building one right now, in a government facility, another much smaller design that is called a micro-reactor.”

It’s not a 1,000% gain overnight situation, he calls it a “long term play on an emerging trend” — but it’s also the only way to cut emissions dramatically. And he likes that they have a guaranteed customer in the US military, which might want small reactors for far-flung basis to replace expensive diesel power plants.

That military interest is driving lots of companies who have been pushing forward microreactor designs… so which one is it that Porter likes, if it’s not Nuscale? We know that General Atomics, Oklo, Westinghouse, X-energy and others have designs that the military has been considering for the past five years.

And as an aside, the very fact that we’re mentioning the names of other companies here, and that Porter mentioned Nuscale power as a “not ready yet” investment in this space, means that it’s obviously an area of some competition… so we should take it with a grain of salt when Porter says that “One company has a monopoly on the future of nuclear energy in America” … even if he thinks the “monopoly” comes from the fact that one company has “secured” a pipeline of multi-billion-dollar contracts with the government, big pharmaceutical companies, and major utilities, strategically “locking in” revenues for the next 25 years.

So… curious? Me, too. “Locked in for 25 years” has a nice ring to it. So what’s our company? Here’s one final slide from Porter’s presentation with a few more clues:

This is, Thinkolator sez, a more established nuclear power company that we’ve talked about a few times: BWX Technologies (BWXT)

BWXT is not a sexy or fast-moving company, it doesn’t have nosebleed revenue or earnings growth… but it does certainly have more experience than anyone else in building small nuclear reactors, since it’s essentially the monopoly provider of reactors for the nuclear navy. Porter thinks the company can go up fivefold from here, and that may well be true… but it’s not going to happen quickly. Both nuclear power and the military tend to move and change pretty slowly.

Here’s how the company describes itself:

“At BWX Technologies, Inc. (NYSE: BWXT), we are People Strong, Innovation Driven. Headquartered in Lynchburg, Virginia, BWXT is a Fortune 1000 and Defense News Top 100 manufacturing and engineering innovator that provides safe and effective nuclear solutions for global security, clean energy, environmental restoration, nuclear medicine and space exploration. With approximately 6,700 employees, BWXT has 14 major operating sites in the U.S., Canada and the U.K. In addition, BWXT joint ventures provide management and operations at more than a dozen U.S. Department of Energy and NASA facilities.”

They just reported their quarterly earnings update yesterday, and the presentation is here — it was well received, with no big surprises, and they are reaffirming their guidance for $2.4 billion in revenue and $2.90 in non-GAAP earnings per share in 2023, which means that BWXT is trading at about 22X forward (adjusted) earnings right now, at about $66. That’s not necessarily cheap for a slow-growth business, but BWXT has been a very steady business since they spun out their conventional power generation operations (Babcock & Wilcox (BW)) seven or eight years ago and became almost a pure play on reactor development and maintenance for the US Navy, and steadiness is valuable, particularly if you think they’ll also have a new growth engine, eventually, with these small modular reactors for military bases (and, perhaps eventually, for civilian uses).

The financials for BWXT look quite reasonable — they do carry some debt, as you might expect for an asset-intensive company that builds nuclear reactors and processes uranium, but it’s only about a billion dollars, and they’ve actually been adding on to that debt in recent years, in part to help them buy back shares, so it has also been a pretty steady cannibal — growing the business, but buying back its own shares to make each share more valuable. That’s slightly risky, using debt to buy back shares, but given the low cost of their debt (it’s costing them about 5% right now, and matures gradually over the next six or seven years), and the likelihood that they’ll be able to continue accessing relatively low-cost debt, given their long term government contracts, I do think we can use that word “slightly” with some confidence. They don’t have any meaningful debt maturities that I’m aware of until 2026, so it’s at least not an imminent risk.

Here’s the visual representation of their recent progress — this is the revenue (blue) and earnings per share (orange) for BWXT over the past five years… that was admittedly a pretty expensive peak, five years ago, but since then the business has grown, on a per-share basis, but the share price has pretty much stayed flat, meaning the stock has dramatically lagged behind the S&P 500 in recent years (the S&P is up about 70% during that time), though BWXT has also been one of the relatively unusual stocks that has bucked the market and done very well over the past 15 months:

When I was writing about NuScale (SMR) for a Nomi Prins tease a few months ago, here’s what I said about BWXT:

“I don’t personally have any direct investments in uranium or nuclear power, but would most likely opt for BWX Technologies (BWXT) instead, just because it has established profitability from its U.S. Navy reactor work so should be much steadier (it probably has less dramatic potential upside over the next decade, too, balancing risk and reward might mean missing out on the maximum reward).”

No change to my opinion there, I still think BWXT is relatively appealing, pretty low risk and probably a steady reward for investors, given their near-monopoly business with the military. And I wish I had started nibbling on it earlier this year, frankly, given how well the stock has reacted of late (no pun intended), but I’ll keep an eye on it. Analysts expect BWXT to grow earnings at about a 10% per year pace over the next few years, so paying 20-25X earnings is probably at the top end of the “reasonable” range for these shares, but it’s certainly possible that steadier earnings might get more of a premium valuation during uncertain times. On the flip side, if we see a lot of furor over the military budget during either the debt ceiling debate, or the pretty likely government shutdowns next Fall during the actual budget debate, it wouldn’t be unusual to see defense contractors take a hit if cuts or paused programs begin to worry investors.

Have any thoughts on small modular nuclear reactors, or on favorites in this space? The other two that come up with some regularity are NuScale (SMR), which is far smaller (about 1/10 the size of BWXT, though half their market cap is still cash), and Rolls-Royce (RR.L, RYCEY), which is not really dependent on nukes in the short term but is also far larger (and looking at 2029, perhaps, for SMRs in the UK… assuming the government backs them at some point). There are lots of others, from fusion startups to the Gates-backed TerraPower, in addition to the established nuclear plant companies like GE Hitachi, Areva and Westinghouse, so it’s hard to envision some future monopoly… but right now, BWXT at least has a fixed book of business in new naval reactors and fueling and maintenance for the existing fleet, and that seems unlikely to disappear in the next couple decades. It may not win, but I’d be surprised if it lost quickly.

That’s just me, though — with your money, you get to make the call. Have a take for us? please share with a comment below…

Disclosure: of the companies mentioned above, I own shares of Huntington Ingalls Industries (HII). I will not trade in any covered shares for at least three days after publication, per Stock Gumshoe’s trading rules.