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Investing in penny shares will be dangerous. With lots of them pre-revenue and most missing the monetary firepower of bigger firms, shareholders can undergo some painful losses.
Nonetheless, it doesn’t at all times should be like this. Certainly, right here’s one inventory that’s seen a 500% improve in its share worth over the previous yr. It was one of many FTSE’s minnows. Now (3 April), it’s a a lot larger fish. Let’s take a more in-depth have a look at the explanations behind its progress and take into account its future prospects.
Then and now
On 4 April 2025, with almost 194m shares in concern at a worth of 47.9p, Ceres Energy (LSE:CWR) nearly certified as a penny share. Since then, its market cap has soared from near £100m to roughly £650m. Why?
Elevated demand for the group’s strong oxide gasoline cell (SOFC) and electrolysis cell applied sciences is the principal purpose.
This comes off the again of big worldwide funding in information centres. It’s extensively acknowledged that Europe’s vitality infrastructure is struggling to maintain up with the additional capability wanted for AI-related actions. However the group’s gasoline cells use hydrogen to rapidly (and cleanly) generate electrical energy and warmth by way of a chemical response.
The group adopts a licensing strategy by promoting the mental property rights to fabricate its cells to 3rd events. Its companions embrace Shell in India and, final week (26 March), it introduced a take care of Centrica, one of many UK’s largest renewable vitality suppliers.
A probably monumental market
In October 2025, the group’s share worth obtained a lift when UBS introduced ahead its prediction of when the corporate will break even by one yr, to 2026. The funding financial institution expects the SOFC market to be price £50bn by 2030, with Ceres Energy securing round 10% of this.
Nonetheless, UBS is speaking about breaking even at EBITDA (earnings earlier than curiosity, tax, depreciation, and amortisation) stage. With a post-tax lack of £47.5m in 2025, it’s more likely to take no less than one other yr earlier than Ceres Energy’s backside line’s within the black.
This led to a 37% discount in income for the yr in comparison with 2024. And a £16.3m widening of its working loss.
Supply: firm announcement
On the up
Nonetheless, it appears to be like to me as if the corporate’s again on observe. When its companions attain industrial scale, the group receives a royalty fee primarily based on each kilowatt of product bought. Considerably, it earned its first royalties in 2025.
Though Ceres Energy may not be a penny inventory any extra, it’s nonetheless loss-making. Nonetheless, its capital gentle enterprise mannequin, by which others tackle the manufacturing danger, means it retained a web money place on the finish of 2025. And it helped the group generate a powerful 70% gross revenue margin.
The group’s clearly satisfied quite a lot of blue-chip firms that its gasoline cell expertise is one strategy to overcome present grid capability constraints. And regardless of its stellar rally, analysts reckon the shares are nonetheless roughly 50% undervalued.
On this foundation, regardless of the apparent dangers surrounding an organization that’s searching for to develop comparatively new technological options, I believe the inventory’s one to think about.
