EQTEC (LSE:EQT) is an energy company listed on the FTSE All Share AIM index. It’s a micro-cap growth stock with a market capitalisation of £168m. As such, it’s a stock with considerable risk and share price volatility. Nevertheless, it’s one that’s garnering increased interest from potential shareholders and I’m keen to discover why.
First and foremost, it’s operating in line with the green revolution — turning waste into clean energy. That’s enough to generate considerable interest. The question is, does it have what it takes to provide growth, value and profitability to shareholders?
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A meeting of energy and tech
It’s essentially an energy company that has developed the technology to generate safe, clean energy from 50 varieties of feedstock, including agricultural, industrial waste, biomass and plastics. EQTEC does this through the process of advanced gasification. This includes sourcing waste olive oil or biomass and converting it to green energy. It then licenses and sells its technology to a variety of industries involved in sustainable waste elimination and green energy infrastructure. The company also supplies gasification reactors, equipment and design expertise. Sometimes it invests in projects for an equity return too.
Projects in the pipeline
EQTEC has several projects in the pipeline for the year ahead. Its latest deal is with private Greek construction firm Nobilis Pro Energy to develop waste gasification projects. It will use this small project as a template for future work. And EQTEC’s CEO David Palumbo believes this could be repeated five to 10 times in the next two years.
In the UK, EQTEC operates much bigger projects, namely the Deeside RDF project in Wales, the Southport Hybrid Energy Park Project and the Billingham Energy waste gasification and power plant. These require stakeholder capital and considerable oversight. While these are excellent long-term plays, the company is enjoying pursuing smaller projects abroad. This is because they’re easier to get up and running and give EQTEC an excellent opportunity to prove its ability in a shorter timescale.
To this end, the German project is an excellent win because it can set the ball rolling for more opportunities. EQTEC also operates in the US, where it’s making good progress despite several headwinds.
EQTEC share price volatility
Back in 2013, the share price was at 31p. It’s now below 3p, but 2020 saw it rising 1,423%. It’s fallen 13% in January though.
Boris Johnson has stated his intention to take a firm stance on transforming the UK into a green and sustainable powerhouse. Meanwhile, the Biden administration in the US is also kick-starting a massive green movement. There are several external factors giving weight to this growth stock, and its flourishing pipeline of work is very promising. Biomass gasification across Europe is surging and opportunities abound.
Until EQTEC proves itself, it remains a highly speculative investment with extreme share price volatility. Yet, I think it looks like it’s in the right place at the right time and its share price could see considerable upside in the coming year. I’m tempted to invest a small amount but realise there’s considerable risk in a stock like this. It doesn’t have a history of paying dividends, so this is purely a growth stock and not an income play.