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.”
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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.
What puzzles me is that Porter Stansberry is touting up BOTH this unconventional energy source AND natural gas company at the same time. If we really went all in on nuclear, that would crush the natural gas market. Unless He expects ALL our natural gas to be exported to Europe?
Who knows… all this stuff will take ten or twenty years, but that kind of timeline doesn’t help much when you’re trying to sell a newsletter.
Nuclear for baseline and NG for peak. The deathblow for NG would be cheap grid storage.
Another possibility is Westinghouse, which fairly recently indicated that it is re-entering the SMR space with its 300MW reactor. I don’t know if Westinghouse meets all the other teased datapoints, I just read an article about their 300MW reactor.
Porter is definitely talking about BWXT, I’m quite sure nobody else comes close to matching those clues, but yes, other folks are sniffing after SMRs, for sure. Westinghouse is now owned by the Brookfield funds, incidentally, I think it’s part of Brookfield Business Partners (I own shares of Brookfield Corp (BN) and Brookfield Asset Management (BAM), but not any of their listed or private funds directly)
I thought Toshiba and Westinghouse also had plans for Thorium Reactors.
Until nuclear power solves its thousand-year toxic waste problem, it will remain problematic.
Until fossil fuels solve their thousand-year toxic waste problem along with their carbon problem, they will remain problematic.
Why does the increased atmospheric carbon dioxide not cause more global warming than predicted by models?
Charles Tips Former Science Editor at the University of Texas PressApr 11
Back in my science editor days in the 70s, it was well understood that solarization produces a mean Earth surface temperature (MST) of 257.5 K (or ~4°F… brrrr!) However, our MST has been steady around 57.2°F (14°C) or 287 K for eight millennia now. When adiabatic process/lapse rate (think: the old Standard Temperature and Pressure calculations you learned probably in sixth grade) is added to the heat from the sun, we are within one percent of our MST.
Ocean-current effects (such as El Niños and La Niñas) and orbital considerations [look up Milankovitch cycles] account for some of that one percent. Massive ice slabs during glacial events greatly increase our planet’s albedo, reflecting the sun’s thermal rays back out of our atmosphere. And then there are stray events, like bolide strikes or mega-volcanos, that spew so much debris into the upper atmosphere that solarization is diminished.
But here we are in not one but two ice ages—the Oligocene in the southern hemisphere and the Quaternary in the northern hemisphere. Temperatures plummet for 90 to 110 millennia and then very abruptly pop up by ~10°C for half a millennium or millennium and a half before plummeting back into another glacial period. We know that plate tectonics (the movement of continental land masses at about the speed your fingernails grow) accounts for ice ages, but we are not at all clear what is behind interglacials like our present Holocene [seen here on the far right]:
In other words, climate scientists, back then at least, were keen to figure out what was actually going on in detail. Tyndall had demonstrated that water vapor (HOH), carbon dioxide (COO) and ozone (OOO) showed evidence of doing that, under laboratory conditions. In the laboratory, carbon dioxide is most easily handled as a solid (dry ice). The temperature at which it sublimes (goes straight from solid to gas) is -80°C, which is the warmest of the three temperature ranges at which COO traps photons. Needless to say, that temperature is quite uncommon here in our lower atmosphere, and should trapping occur more up in the troposphere, the 2nd law of thermodynamics says that it has no way of traveling back toward warmer temperatures.
But laboratory tests show that COO is insanely efficient at trapping photons at certain rebound infra-red ranges, so efficient that a mere 20 ppm traps 99% of them. That image above was based on Vostok ice cores from Antarctica. Similar ice-core studies were conducted in Greenland, and along with increasingly sophisticated techniques in paleo-tree-ring and earth-layer studies, one big push of climate science in the 70s was to establish once and for all, the contribution of COO to warming of our Earth.
Given the logarithmic trapping efficiency of COO, the peg figure for modeling purposes was typically set at something like 1°C for each doubling of atmospheric COO. And no correlation was found, which is more of a testimonial to the complexity of weather and climate than anything else. The results looked like this:
…which is tantamount to saying that if there is any correlation whatsoever, it is minuscule.
However, shortly after I moved to California in the late 70s in a switch to commercial publishing, I learned that a freshman legislator addressed the House about the coming threat of “Catastrophic Anthropogenic Global Warming” claiming that a mere 10 percent rise in atmospheric COO would account for a 1°C jump in MST with the likelihood of a “runaway hockey stick of heat” from there.
Poppycock!
And so I went to the library at Cal to see what journal articles had showed up in the year since I stopped checking them… none… just a single piece stating that we needed to do a better job of accounting for atmospheric COO’s effect on our planet’s climate.
I learned much of the backstory to that episode at the time, enough to know that it was not backed by science. In a week, I’ll have a book arriving that I hear will detail the whole story. I look forward to sharing that with you.
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Also, I have read of another alternative to supplying national electric grid, it being called a PhotoVoltaic and battery stored electric (PVAB or similar) provision, too, for consideration and comparison. And of course all the big names are supposedly buying into that set of shares.
Yes, the investment into batteries is massive — but power demand is also going up around the world, and even coal consumption is still growing. Batteries need some more revolutionary leaps forward… hopefully we’ll get there, but energy is a “more more more” market, not something where the world is narrowing down to one winner.
Buying RYCEY in nibbles. $1.82/share. The cars….NOT! Aviation biz still keeps things running. Brit Government has “supposedly ” approved / committed to a “deal “. At a buck 82 I’ll keep dipping my “beak” in the bowl.
Gates also created a company some time back that will now be breaking ground with a completion around 2030. I don’t see the company as listed though.
https://www.terrapower.com/
https://www.gatesnotes.com/Wyoming-TerraPower?WT.mc_id=20230505100000_Wyoming_BG-EM_&WT.tsrc=BGEM&fbclid=IwAR3WkBxJBlr32DIumcYmYHCr0EsCvwUFgVJ29Qv97YJMY5M74tkMwXWtU5I
Yep, TerraPower is still private. As we see with others,
It’s really hard to be public when your projects take so long to develop.
So, instead of Three Mile Island we are going to have Neighborhood Block Island?
I just saw a Luke Lango article saying it was time to invest in nuclear fusion (not fission) companies. Saying just a few fusion plants could power the whole world.
Lots of venture money going into that in recent years, though from all I read it’s way, way behind SMR projects.
Stepping away from the tech side of things for a moment, we now have Oliver Stone coming out with his pro nuc mea culpa movie/documentary.
More to come – probably. And that cheerleading will likely stir the interest from and to unknown directions.
Nomi jumps in… her Rogue Economics and allied pitchers are promoting her “Summit” Power Shift 2023 5/10/23. Yep she has the inside track on, you guessed it, SMRs.
She’ll tell us why we MUST position ourselves before the Dems unleash the $4T torrent of government cash into the SMR sector BEFORE the next congressional meeting on 5/12/23. It’s about that end of life as we know it bill S 1111.
No problem, we can play this little unknown firm in Oregon which she tells us is the only one licensed to legally produce SMR’s in the US. Cost” $2 share.
Yep, that’s still Nomi Prins teasing NuScale (SMR) — the $1 or $2 “play” she has been teasing on that stock is buying the warrants, not the stock (SMR came public as a SPAC, which is where the warrant comes from). Covered here: https://www.stockgumshoe.com/reviews/rogue-strategic-trader/answers-smr-tease-by-nomi-prins-whats-the-next-exxon/
Thanks very much for the analysis!
NuScale is Thorium Fueled, Modular and safer. Lends itself better to Mini-Grids and high density production, e.g. Aluminum Refining.
https://www.nuscalepower.com/en
NuScale uses Thorium? I haven’t seen that, I thought their SMR designs used the regular (slightly less enriched) uranium that’s used in other light water reactors.
I owned SMR briefly but when I found that they run on Russian highly enriched uranium I exited. I recently bought some AAC a SPAC involved with Nuclear, and I read that CCJ acquired Westinghouse’s Nuclear assets. I thought CCJ was strictly uranium mining. The BWXT looks compelling since they are profitable and sizeable. So far my Nuclear investments are for tracking purposes. It’s one of those things we need to support humanity, but humans are fearful of the technology and don’t want it their backyard. Kind of amazing when you think how many years it has been since there was a nuclear disaster that killed hundreds of people. When was that anyway?
Thanks for bringing up AAC, that’s the SPAC merging with X-Energy to take it public — they’re another small modular reactor firm, I don’t know where they stand in terms of design approval or production timeline but they’ve got the typical optimistic SPAC merger presentation if you want to start with that.
CCJ and Brookfield are partnering on Westinghouse, 49%/51% — the Brookfield Renewable fund (BEP) and Cameco (CCJ) are the new owners, they bought from Brookfield Business Partners (BBU), which had acquired Westinghouse in a private equity deal and is now passing it along to other owners since it’s apparently somehow “stabilized.”
Travis, thanks so much for your great review and information.
Thanks for reading!
Westinghouse has already set up smr’s. Maybe it’s the best bet now
If so, then BIP or CCJ would be the only way to buy a piece of Westinghouse at the moment.
Another great reason why I’m a recurring Subscriber to Stock Gumshoe. So many of these pitches come across and it’s so easy to get sucked in. Thanks for the great sleuth work Travis!!
Thank you!
Thanks Travis. I came a little late to Porter although I’ve followed the Nuclear reactor stuff for years and am convinced there’s no money to be made by us small investors. So I got suckered into listening to Porters presentation only to find ouches pitching his newsletter, “reduced” to $1000. Delighted to find you’d looked at it previously. He’s teasing some (to me – mythical) micro reactor, not the SMA (Nuscale) reactor. Thanks for IDing the company, and its competition. I’ll check it out and comment some more.
Travis, thanks for the quick response.
Porter Stansberry’s tease says there are three Small Modular Reactors (coincidence that NuScale’s ticker is SMR? ) in operation right now in the U.S. I’d like to know where and what type of reactor they are, what kind of fuel, etc.
About 10 years ago, I was looking at the future of nuclear energy, brought about by an argument about depleted uranium used in tactical nuclear weapons, and discovered that the technology existed for thorium-fueled nuclear reactors to power individual homes by a micro-scale reactor the size of an outdoor A/C unit, and without the radiation risk of uranium reactors in worldwide use. If the reactor failed, it would simply stop working, because it required the thorium fuel to be bombarded by an externally driven neutron. such a small home unit would only require servicing every 5 years or so, the research I read speculated. It would also be much cheaper than traditional uranium reactors, since no cooling towers or huge containment vessel would be necessary, and because naturally occurring thorium is about as plentiful on the planet as lead.
At that time, safe disposal of used thorium fuel was the technological roadblock, but less dangerous than spent uranium fuel rods, if memory serves.
Interestingly, thorium has such a low radioactivity that it is used for shielding nuclear components, and the final core of the Shippingport, PA light water breeder reactor used thorium for shielding the U-233 core.
I mentioned thorium to FL Sen. Bill Nelson (D) who was on the House Science, Space and Technology Committee at the time, and he knew nothing about it, even though the Shippingport reactor had produced energy for 25 years before being decommissioned in 1982.
I’ve never heard a news source talk about thorium’s potential for solving the “Climate Crisis” (maybe they don’t want a solution?), or providing safe energy without a vulnerable electric grid.
Could one of the companies Travis mentioned be involved in such a project now?
Not that I know of. Part of the “downside” of thorium 30 or 40 years ago was the lack of
Plutonium byproducts for weapons, as I recall, though I haven’t looked into it lately — just hear lots of chatter about “why haven’t we ever really tried this better idea,” and it sounds intuitively smart, despite my lack of expertise.
Start paying attention, battery storage is not the answer? It’s a device that stores energy, it does not create, or make energy. The stored amount decreases if not used ASAP. These SMR reactors make energy from the steam generated from heating water, driving a power turbine….24/7 everyday of the year. The benefit of the new fuel they use is it cools down rapidly taking the high risk off the table of a meltdown. Smaller versions have now been used for almost 50 years to power our submarines, and aircraft carriers. Several of these reactors can be placed entirely inside of existing coal fired plants which already provide grid access to 100,000 of homes. The world requires far more power than we currently can produce, and they need to build it out quick. My view….Our Government wants to control the electric grid, electricity is KING, and the KING makes the rules for the citizens to be taxed via a use tax on the electric grid. Be careful what you ask for when you see congress telling you the Electric Grid is a National Defense Entity, and must be controlled by both the defense and energy department for security reasons.