The Motley Fool

Investing in renewable energy: 1 AIM stock I’m watching

Image source: Getty Images.

ITM Power (LSE:ITM) is an energy storage and clean-fuel company specialising in expanding UK hydrogen power. Companies and governments are increasingly looking at investing in renewable energy. Hydrogen power could be the future of green energy providing it can be harnessed in a way that is affordable to the masses. It also makes for an ethical alternative to investing in oil stocks. The ITM Power share price is up 11% this morning.

Disappointing financial results

Earlier in the week, ITM warned that total income for the year to April 30 had fallen 60% year-on-year. This is due to a combination of project delays and losses on legacy projects, including the Shell Refhyne project. Its recent joint venture with Linde, an engineering procurement and construction (EPC) specialist, should reduce the risk of this happening again.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

ITM made a £9.8m loss from operations, an increase of 85%. As far as earnings before interest, tax, depreciation, and amortisation (EBITDA) were concerned, it lost an 84% wider £8.3m and it spent 29% more cash.

ITM has been a constituent of the London Stock Exchange’s AIM market since 2004. It has a market cap of £1.3bn, does not offer a dividend, while earnings per share are negative. This makes it a purely speculative, high-risk investment. However, for those savvy investors buying-in a year ago, the ITM Power share price has risen 750%.

Renewable energy stimulus

World governments are setting up stimulus packages to assist renewable projects in an attempt to clean up the planet. Germany has allocated €9bn to spend on green hydrogen projects. It aims for this to eventually contribute 10% of the country’s total electricity capacity. Meanwhile, The Australian Renewable Energy Agency opened a £38m round of funding for renewable hydrogen projects in April. It has received 36 applications for projects worth over £1.6bn, far overreaching expectations.

Race to Zero is a UK government initiative designed to mobilise leadership from businesses, cities, regions and nations to stimulate a zero-carbon recovery. We expect the UK Government to lay out its green recovery measures and plans for investing in renewable energy later this month.

Partnered with Linde, it seems ITM Power stands to capitalise on many of the climate change opportunities arising. The number of projects to tender for are growing, highlighting the increase in green hydrogen interest throughout the world.

With so many companies and countries competing in the race to harness this technology, the stakes are high. Yet despite government stimulus investing in renewable energy at an increasing pace, this business is unlikely to become profitable any time soon. The UK stock market is on shaky ground as the country heads into recession. I think share price volatility will continue for the foreseeable future. This is not a stock the risk-averse investor should buy, but I do think it is a stock with growth potential for those willing to take a gamble.

If it is growth stocks you are looking for, let the Motley Fool help you...

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Kirsteen 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.

Our 6 'Best Buys Now' Shares

The renowned 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 enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.