The Motley Fool

Is penny stock Quadrise Fuels (LSE:QFI) a good investment?

Image source: Getty Images

Quadrise Fuels International (LSE:QFI) is a penny stock with a rising share price today. Quadrise is a London-listed FTSE-AIM stock in the oil and gas sector. Its market cap is around £76m and earnings per share are negative. It doesn’t offer a dividend, and the QFI share price is volatile. But is this potential growth stock the sort of investment I should consider adding to my Stocks and Shares ISA?

QFI solves an environmental problem

Quadrise aims to solve the problem of significant oversupply of heavy fuel in the market. Producers and refiners make too much heavy oil, while demand is falling due to tighter maritime regulations. It’s also uneconomic to produce and it’s polluting. Nevertheless, there is a large market that still wants the fuel. Quadrise uses water and additives to create a fuel oil that is cleaner and cheaper to use.

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...

Its new renewable fuel bioMSAR offers 20% to 30% reductions in CO2 emissions. This is an alternative to using Liquefied natural gas (LNG), but with less risk and lower cost.

Covid-19 slows the penny stock’s progress

The company has a few projects ongoing. It’s working with mining and chemical clients in Morocco where an industrial-scale trial is progressing to produce a fuel oil replacement. QFI will be paid £100k for the industrial trial and phase 2 study under existing agreements with the client. 

In Utah, it’s testing at the Petroteq Oil Sands Plant, for which it will be paid £150k. On successful completion, this will lead to the development of commercial production facilities capable of treating 10,000 barrels of oil per day. The QFI share price is rising today in response to news that this plant has restarted after a shutdown to allow for certain additional enhancements.

Quadrise also has projects in Ecuador and Saudi Arabia. Covid-19 has really thrown a spanner in the works when it comes to visiting and operating in these locations. But it’s hopeful the worst is now behind them.

Quadrise financials

For the six months ended 31 December 2020, the firm had £1.1m in cash reserves, down from £3.8m the year before. It raised an additional £7m in March via a share placing. This gives it the funds to progress with its projects until July 2022.

Its losses for this period amount to £2.3m, which was the same as 2019. Its assets were valued at £4.9m, down from £7.8 the year before.

There’s no doubt this is a good time for companies to be involved in renewables. Anything that helps the planet and reduces costs to industry is welcome. The key for investors is whether the company can logistically achieve what it hopes to, with the cash it’s already raised.

The Quadrise share price is up by 240% in a year. Unfortunately, penny stocks are notoriously volatile and very often must raise funds time and again. This makes it a risky investment. It’s not something I’m looking to invest in today, as I prefer to stick to the FTSE 350 stocks for my Stocks and Shares ISA. Nevertheless, I do see the potential and will keep an eye on its future progress.

For regular stock market investing ideas and help choosing the best shares to buy now, sign up to The Motley Fool today.

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.

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

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.