This exciting mid-cap growth stock caught my eye after going gangbusters in October. Green energy specialist Ceres Power (LSE: CWR) was the best performing FTSE 250 stock in October, jumping almost 75%.
Of course, that doesn’t mean it will keep climbing in November. Profit takers have already started to emerge, and Ceres has shown it can be volatile. It’s up 360% in six months, but only 33% over the year, and down 62% over five years. It looks like this one could be a rollercoaster ride.
Ceres has the power
Ceres develops solid oxide fuel cell and electrolyser technology for clean power generation and green hydrogen production. They’re designed for AI data centres, industrial buildings, electricity grid stabilisation and cleaner marine power. The company operates a technology licensing model, which keeps it asset-light and strengthens its financial position.
In July, Ceres got a boost when strategic partner Doosan Fuel Cell began mass production of fuel cell stacks in South Korea using its technology. These stacks will power clean energy systems in high-growth markets like AI data centres. Doosan anticipates the first sale by year end. If it comes through, this will be the first royalty revenues Ceres gets. It’s a big opportunity for investors seeking a riskier FTSE 250 growth play.
Huge AI potential
Ceres has a market cap of £520m but isn’t yet profitable. Last year it lost £28.3m. Revenue for 2024 climbed 132% to £51.9m, supported by record orders of £112.8m from new partnerships in Asia.
Yet on 26 September this year, the shares fell after it cut full-year 2025 sales guidance by nearly 40% due to delays in a new manufacturing licence agreement. The board pinned that on strong comparatives following a significant one-off licence with partner Delta in 2024. It didn’t stop investors from chasing the chares higher last month.
Then on Wednesday (29 October), Swiss Bank UBS nearly tripled its share price target from 120p to 350p and upgraded Ceres to Buy, citing accelerating demand for its solid oxide fuel cell technology and a better financial outlook.
Long-term potential
UBS expects the company to break even in 2026, a year earlier than previously forecast, thanks to cost cuts and that royalty income from Doosan. The bank sees Ceres capturing up to 10% of a growing AI data centre segment potentially worth £50bn by 2030. Low capital intensity and cash burn could leave the company with a £50m cash buffer in 2026 before turning cash-flow positive in 2027, it reckons.
The Ceres share price jumped 16% on Wednesday (29 October) to 306p but ended the week at 277p, including a 7.64% drop on Friday. Profit takers, presumably.
Six out of seven analysts rating Ceres in the past three months labelled it a Strong Buy, one said Hold. Their consensus one-year price forecast is 275.8p, just 3% above today’s level. Of course, most estimates will have been made before the recent surge.
Given the large risks, I think it’s only worth considering for experienced investors with a portfolio that can handle swings. I’m watching the shares carefully and may consider buying if they slide a little from here. I’d feel safer buying after a dip than a spike.
