Here’s 1 growth stock you probably haven’t heard of!

Jabran Khan delves deeper into a growth stock which could experience major growth linked to the energy sector.

| 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.

A young Asian woman holding up her index finger

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

There is a big focus on renewable energy sources currently as the world races to cut carbon emissions. One growth stock that could play a part is Ceres Power (LSE:CWR). I must admit I hadn’t heard of it until I began researching the sector for investment purposes some time ago. Should I buy Ceres shares?

Renewable energy technology

As an introduction, Ceres is a leading developer of fuel cell technology. These fuel cells help the production of clean, low-cost energy. It currently has one flagship product, known as Ceres SteelCell.

So what’s happening with Ceres shares currently? Well, as I write, they’re trading for 389p. At this time last year, the stock was trading for 998p. This is a 61% decline over a 12-month period.

The investment case

Let’s take a look at some bull and bear aspects of Ceres shares to help me make a decision on my position.

First of all, Ceres as a growth stock has lots of future potential ahead, in my opinion. There is lots of policy support from governments to find alternative, clean energy solutions. As well as policy support, there is a lot of money being thrown at this from the public and private sector. An example of this is Ceres’ partnerships to date. As a smaller firm, it may not have the financing and infrastructure in place yet to progress its product line. These partnerships will enable that, and could eventually translate into performance growth, and returns for shareholders.

It is worth noting that Ceres will make money from licensing fees from said partnerships. To date, it has some lucrative partnerships, including one with energy powerhouse Shell, another with Chinese firm Weichai, and South Korean firm Doosan Group.

Investor sentiment towards Ceres could certainly boost shares too as the rise of ethical investing (ESG) continues. Millennials for example are looking for businesses to invest in that are ethical and Ceres ticks this box.

Away from the positives, it is worth noting that despite Ceres’ share price fall, the shares do look expensive. I find this is common in a growth stock as the potential has not been realised yet, but there is some excitement around future potential. In addition to this, Ceres is yet to turn a profit. I do believe this could change imminently as some of its partnerships are set to yield licence fees in the coming fiscal year. I will keep a keen eye on future trading updates.

A growth stock I will continue to monitor

Taking everything into account, I’m going to keep Ceres Power shares on my watch list for now. Based on my research and due diligence, there is lots of potential ahead, and the market excitement and partnerships signed to date demonstrate this. For me personally, I want to see more meat on the bones from a financial and trading updates point of view, and for the business to become profitable for me to be able to truly understand how it could boost my holdings.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jabran Khan has no position in any of the shares mentioned. 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

Young black colleagues high-fiving each other at work
Investing Articles

2 FTSE 100 value stocks I’d buy for my Stocks and Shares ISA in March!

Now could be a great time for fans of FTSE 100 value stocks to go investing. Here are a couple…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Looking for value stocks? Here’s 1 I’d buy and 1 I’d avoid!

This Fool delves deeper into two value stocks she’s had her eye on and explains why she’s bullish on one,…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

With the Airtel Africa share price in pennies, is it a bargain?

With the Airtel Africa share price having slumped by a quarter in just one month, this shareholder considers some of…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

Are these 2 defensive FTSE 100 stocks shrewd buys after recent updates?

This Fool takes a closer look at these FTSE 100 stocks. She admires their defensive traits -- but does that…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The FTSE 100 closes up after full-year results from leading UK firms – are they buys?

Earnings season brings about a lot of ups and downs for the FTSE 100. Yesterday had some particularly good releases,…

Read more »

artificial intelligence investing algorithms
Investing Articles

Should I buy NVIDIA stock as a British investor?

NVIDIA stock is up two-thirds this year alone. Our writer considers some pros and cons, specifically given that he is…

Read more »

Investing Articles

With £2,000 in excess savings, I’d buy 41 shares in this Warren Buffett dividend stock

Stephen Wright thinks one of the best dividend shares to buy right now might be a Warren Buffett stock that’s…

Read more »

Investing Articles

How many Aviva shares do I need to collect a £100 monthly income?

Aviva shares are well suited for passive income purposes. Our writer works out how many would be needed for a…

Read more »