UK stock ITM Power (LSE: ITM) has just exploded higher. Had someone invested £5,000 in the company five days ago, that capital would now be worth about £6,900.
So, what’s going on here? And is the stock – which has more than doubled year to date – worth considering as a growth investment today?
A fast-growing renewable energy company
Before I look at what has pushed the ITM share price higher, it’s worth explaining what this company does. Because it isn’t very well known.
Founded in 2000, ITM Power is a green hydrogen company. Today, it designs and manufactures PEM (proton exchange membrane) electrolysers – sophisticated renewable energy devices that use electricity to spit water molecules into hydrogen and oxygen.
In recent years, the company has grown its revenue significantly thanks to deals with a range of industrial companies (revenue climbed from £3m to £26m between FY20 and FY25). Yet it’s still not profitable, meaning that it’s higher up the risk spectrum from an investment perspective.
Why has the share price exploded?
In terms of the latest share price move, it’s down to a deal with Rheinmetall. On Friday (17 April), ITM announced that it has entered a strategic collaboration with the German defence powerhouse.
This collaboration will focus on Rheinmetall’s Giga PtX project, which aims to establish a Europe-wide network of decentralised synthetic fuel production plants for the NATO armed forces with the goal of strengthening defence energy resilience. The two companies envisage the deployment of several hundred decentralised production plants across Europe – each with an electrolysis capacity of up to 50 MW – capable of producing approximately 5,000 to 7,000 tonnes of e-fuel per annum per facility.
This collaboration is obviously a big deal for ITM Power. Not only has the company partnered with one of Europe’s leading defence companies (which obviously sees its green hydrogen technology as attractive) but it looks like there’s the opportunity to roll out its solutions at scale.
“The Giga PtX project represents a repeatable deployment opportunity for large-scale electrolysers”
Dennis Schulz, CEO of ITM Power
Worth a look?
Is ITM Power worth considering as a growth investment today? Well, it could be (as a very speculative investment).
This isn’t the type of stock I’d load up. Because it’s very risky.
As I mentioned earlier, the company isn’t profitable. Over the last five years, it has consistently lost a lot of money despite its prolific revenue growth, and analysts don’t expect the group to be profitable any time soon.
Meanwhile, its share price can be very volatile. In recent years, it has shot up on a number of occasions (check out the spike in 2020/2021), only to come crashing down shortly after.
As for the valuation, it’s pretty high if we look at the price-to-sales ratio (we can’t use price-to-earnings as there’s no earnings). It currently sits at about 30.
But there’s definitely potential here given the deals the company is doing with other firms. So, it could be worthy of further research.
