This alternative energy stock is up 1,000% in a year! Should I buy now?

This alternative energy stock is converting waste plastic into clean energy. Zaven Boyrazian takes a look to see if there’s an investment opportunity.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Arrowings ascending on a chalkboard

Image source: Getty Images.

Powerhouse Energy Group (LSE:PHE) is an alternative energy stock whose share price has seen explosive growth of over 1,000% since early 2020. The surge in share price appears to have been triggered by the announcement of site preparation for its Protos plant.

But what does Powerhouse do? What is the Protos plant? And should I be considering this alternative energy stock for my own portfolio? Let’s take a look.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

A pioneering alternative energy stock

Powerhouse is an energy producer. It recently developed a new and proprietary technology called the DMG System. Put simply, it uses a thermal conversion chamber to take non-recyclable waste plastic, end-of-life tyres, and biomass products, to transform them into a synthetic gas called EcoSynthesis.

Beyond providing a solution to the environmental landfill problem, EcoSynthesis gas has two uses. The first is as a suitable fuel for traditional gas turbines and steam cycle engines that generate electricity for most homes in the UK.

The second use case is what I think has investors excited. EcoSynthesis gas is rich with hydrogen. Powerhouse extracts this element to create hydrogen fuel cells. These can be used to generate clean electricity, as well as power zero-emission vehicles.

With UK environmental legislation pushing towards carbon neutrality by 2050, hydrogen technology has proved to be a viable, clean energy source. And the ability to create it from plastic waste sounds like an exciting investment proposition to me. Especially since current forecasts indicate the waste-to-energy market will reach $54.8bn by 2027.

Turning waste into energy with Protos

The Protos plant is Powerhouse’s first energy plant that received planning permission and began construction in 2020. Once on-line, the facility is expected to process 4.9 million tons of plastic waste each year using the DMG system, and generate 140MW – enough to power more than 250,000 homes.

However, as promising as this technology is, the alternative energy stock is still exceptionally early in its business cycle. As I just said, Protos is the company’s first facility. Until it’s finished and operational, Powerhouse has no source of revenue, with plenty of expenses. And so it needs to continually raise capital to keep the lights on — that’s quite risky.

While no official completion date has been announced, a facility of this size and complexity is likely to take between two and three years to complete. Any delays or disruptions might begin to spook early investors. And given that the firm is continually issuing equity to raise funds, a loss of investor confidence could significantly impact the future of Protos and Powerhouse itself.

This alternative energy stock is up 1,000% Should I buy now
Source: Peel Environmental – Protos plant layout

The bottom line

The alternative energy stock looks like it could be an incredible business for investors and the environment. But, until the Protos plant comes on-line, the business model remains unproven.

Personally, I think it’s too soon for me to be investing in this company. There are simply too many unknowns. And the recent surge in the share price only adds additional risk.

But the technology could be vital to a carbon-neutral world. Therefore, I’m keeping a close eye on this stock.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Zaven Boyrazian does not own shares in Powerhouse Group. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Satellite on planet background
Investing Articles

£3.3bn raid sends the Vodafone share price up. Here’s what I’d do

The Vodafone (LON:VOD) share price opened higher on Monday, as news of a big buy from a major investor was…

Read more »

Happy woman with excess weight smiling and dancing alone in sports clothes
Investing Articles

Top British growth stocks for May

We asked our freelance writers to share the top growth stocks they’d buy in May, which included miners and musical…

Read more »

Electric cars charging at a charging station
Investing Articles

A cheap UK share I’d buy for the electric vehicle revolution

This cheap UK share has collapsed in value since I bought last year. But here's why I'm thinking of buying…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

3 distressed stocks with huge potential that I’m considering for my portfolio!

These three distressed stocks have performed badly in 2022, but that doesn't mean they won't recover. Here's why I'm considering…

Read more »

Luxury inside of NIO car
Investing Articles

Here’s why I’ve just bought NIO shares!

I've recently bought NIO shares, despite the stock being down nearly 80% over the past year. Here's why!

Read more »

Mature people enjoying time together during road trip
Investing Articles

Is now the time to buy Tesla shares?

Tesla's share price has fallen in 2022 and so has its valuation. Edward Sheldon looks at whether this is a…

Read more »

A graph made of neon tubes in a room
Investing Articles

Are Woodbois shares worth me buying at 4.7p?

Jon Smith considers the recent surge in price for Woodbois shares, and wonders if the move lower last week represents…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

How I’d generate a passive income for life with just £20 a week

Dividend shares can be an excellent way to earn a passive income for life. Our writer discusses a plan to…

Read more »