Why Oklo Is My Nuclear Option

"Giving them all we got." 

... The fictional Scotty from the original "Star Trek" series

The demand for more power is no longer just a request from the also fictional Captain James T. Kirk. We always knew that the existing power grid was insufficient and that lack of consistency in the ability of traditional utilities to meet even just commercial and residential demand has just about run its course. This is no longer "just" about restoring power to at-risk communities after storms or deep-freezes. 

Now, it's about the very lifeblood of what is currently driving large-scale capital spending. In short, being able to meet the now exponential growth in demand for electric power is paramount to driving economic growth itself. I don't know how many readers watched Jim Cramer's interview on CNBC with Nvidia  (NVDA)  CEO Jensen Huang, but one thing Huang said that is still ringing in my ears, other than my service-related tinnitus, was this: "Without energy growth, there is no industrial growth, without industrial growth, there’s no stock price growth, there’s no economic growth, there’s no national security.” 

Huang then told Jim: “The realization that we have to go back and become a country that has energy growth is really foundational." 

This is something I have been playing for. I have been invested in GE Vernova  (GEV) . GE Vernova has a successful business selling natural gas-powered turbines. The company also has its hand in nuclear, steam, wind and hydro-electric generation. I don't think that we have to worry about GE Vernova being a winner in this business environment. 

I just don't know if gas, steam, wind and hydro are going to be enough. I think I need more eggs in the nuclear basket. As demand for large data centers is only increasing and clearly the traditional means of energy production are not going to be able to meet that need, the only way to do so (opinion) is going to be through scaled clean and seemingly endless generation of power. Nuclear. That brings me to Oklo Inc.  (OKLO) . Readers who are also viewers of Liz Claman's show on Fox Business may have heard me mention the stock last week. I met Chairman and CEO Jacob Dewitte backstage. Talk about brilliant. Gee whiz.

Who is Oklo?

The New York City-based company describes itself as an advanced nuclear technology company. The company is engaged in developing fast fission power plants to provide clean, reliable and affordable energy at scale. The company also provides non-stop clean energy to data centers, factories, industrial sites, communities and national defense facilities. Heat and power are provided through power purchase agreements.

The company's reactors can convert used nuclear fuel into clean energy and supply affordable power to clients across many industries. Oklo was founded in 2013 by two MIT grads, CEO Jacob Dewitte and his wife, Carolyn, who is the COO. The board had been chaired by Sam Altman of OpenAI fame until April when he resigned in order to allow Dewitte to make deals with other tech companies without creating conflicts of interest.

Current Secretary of Energy Chris Wright was a member of the board until then-Pres. Elect Donald Trump nominated him to become the next Secretary of Energy. He resigned from the board to serve in the president's cabinet. Back to the science: Oklo's powerhouse product line, Aurora, is designed to safely run on fresh or recycled fuel and can produce 15 to 50 megawatts of electricity. That powerhouse has the potential to expand production up to 100 megawatts.

News 

Last week, the U.S. Department of Energy selected Oklo and three other privately held companies to work on the federal government's pilot program to develop advanced nuclear fuel lines. Oklo specifically was selected to build and operate several fuel fabrication facilities to support its Aurora and Pluto reactors as well as other "fast" reactors. 

All three companies will be responsible for all costs associated with the development, operation, and decommissioning of their fuel fabrication facilities. They all must also manage the sourcing of nuclear material feedstock. 

That said, the firms may apply to receive high-assay, low-enriched uranium from the federal government. The project may also drive private sector investment and hopefully create a fast-track approach to commercial licensing. Oko is set to report fiscal third quarter financial results in about a month.

The Chart​ 

The cup-and-handle pattern that the stock developed this past spring worked like a charm. Now, we run into a hiccup. Maybe. The shares spiked in mid-September and then created what could be a Double Top pattern of bearish reversal by early October. I'm just not sure that this is a Double Top. If it is, the downside pivot is $110, and then I'll have to figure something out. 

That said, it looks like the stock could also be in the early innings of a Rising Wedge pattern. Now, that's also a pattern of bearish reversal, but those can go quite a few innings before said reversal actually occurs. The indicators are positive. Relative Strength is muscular but is no longer technically overbought. The daily moving average convergence divergence has all three components in positive territory with the 12-day line still running above the 26-day line. That's short to medium-term bullish.

Oklo Plan

Target Price: $169

Pivot: $147

Add: Down to 21-day exponential moving average (would maintain the Rising Wedge)

Panic: Loss of 50-day simple moving average (currently $91) or 8% loss

At the time of publication, Guilfoyle was long GEV, OKLO equity.