GSE Systems (NASDAQ: GVP) stock is up 80% this morning. GVP stock could be counted among the beneficiaries of the nuclear resurgence, that’s true. It’s also possible that there’s a momentum trade going on here, no more, playing off the idea that the company might so benefit. That there’s at least a plausible reason for the price action therefore makes it difficult know which way to play this. Momentum trades - or meme stocks perhaps - have a tendency to revert soon enough. Stock price changes based upon real market factors tend not to.
The secret is in what GSE does: “ GSE Systems, Inc. provides professional and technical engineering services, staffing services, and simulation software to power and process industries in the United States, Asia, Europe, and internationally. It operates in two segments, Engineering and Workforce Solutions. The Engineering segment provides various technical engineering services for ASME programs; and simulation software and services, including operator training systems for the nuclear, fossil fuel power generation, and process industries.” The big issue is really simulations for the nuclear industry. And we’re seeing signs of a resurgence here. The uranium price is well up this past couple of weeks. We’re hearing all the right political noises about how nuclear is an essential part of the climate change revolution.
People in the nuclear industry probably should be doing well that is.
GSE Systems stock price from Google Finance
Given that GSE works in simulations they should be one of the first people to benefit from an increased nuclear spend - you do the simulations at the design stage. On the other hand it’s also possible to point out that everything - but just everything - moves at glacial speed in the nuclear industry. So it’s possible to assume that it might be several years, let alone fiscal reporting periods, before anything notable happens.
Our own experience of the nuclear industry would suggest that this is, at best, premature. Yes, GSE Systems might well benefit but it’ll not be any time soon. So, our best guess is that this is a momentum trade which’ll fade soon enough. Note that’s an opinion, not anything we can back up with facts.
