The Motley Fool

The Helium One share price is surging. Should I buy now?

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.

Oil pipes in an oil field
Image source: Getty Images.

The Helium One Global (LSE:HE1) share price surged by over 80% in the past month and it caught my attention. Helium One Global aims to explore, develop and supply high-grade helium to several global industries. It owns the rights to develop several locations in Tanzania where helium has been detected in gases seeping from the ground.

Helium One share price rises

Helium is perhaps best known for its use in balloons. Fittingly, the Helium One share price has risen to lofty heights recently. It climbed more than 80% in the past month, and over 220% since its shares listed in December 2020.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Despite the sharp rise in share price, I think it still has vast potential as an investment. Some of the greatest investment potential can come from small-cap stocks. With a market capitalisation of around £80m, Helium One certainly fits this category.  

What so great about Helium?

Helium is commonly found as a by-product of liquified natural gas. The global helium gas market is expected to grow from $2.7bn in 2018 to $4.5bn in 2025. In addition, global helium supply is limited and demand is greater than supply. This is leading to higher prices.

The US Federal Helium reserve is a strategic stockpile started in 1925. But it ceased sales to industrial customers in 2019, further constricting supply.

Why is demand so high? Helium’s use in balloons is just 8% of the market. More importantly, 20% of helium is used in MRI scanners, which is a globally growing market. Other uses include high-growth areas such as in hard drives, data centres and rockets. Up-and-coming space exploration companies like Space X would be buyers of this non-toxic gas.

In the long term, in a world moving away from fossil fuels, alternate sources of helium will need to be found.

Why I like Helium One

This is where Helium One comes in. I’m bullish on it for a number of reasons. It has a pipeline of advanced and early-stage targets. Having been active in Tanzania for five years, it has a first-mover advantage in the area. It has also managed to secure some of the best locations.

At 138 billion cubic feet, it has the biggest resource of any listed primary helium explorer. It’s “drill-ready”, and well-financed.

Encouragingly, the management team also has a track record of delivering natural resource projects in Africa.

What about competition? Competitors have projects that are smaller, earlier stage and lower grade. The Helium One resource is 50 times larger than any other listed competitor.

The risks

Bear in mind though, the Helium One share price has risen significantly since it listed. Could its future prospects be priced in to the share price already? Possibly. There are certainly risks with investing in a small exploration company. There are no guarantees, in my opinion.

Encouragingly, Helium One has a good relationship with the authorities in Tanzania and licences were recently renewed. That said, there is a risk with authorities reviewing licences, particularly if the find is successful. However, it’s worth pointing out that there are several multinational and junior miners successfully operating in Tanzania. 

All things considered, the surging Helium One share price could signal further interest in this small explorer. I already own a small the shares in the higher-risk portion of my portfolio, but I might consider buying some more on further positive updates.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Harshil Patel owns shares in Helium One Global. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.