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Shares of Sheffield-based hydrogen power enterprise ITM Energy (LSE: ITM) have been exploding! The value has doubled in a matter of months. Since March, the share value is up 167%. The agency has grown to such a dimension that it’d quickly be in competition to enter the FTSE 250 (it’s already larger than many on that index).
This all comes with the backdrop of an terrible few years for the inventory. Earlier than this yr’s run up, the shares had fallen by 96% in solely 4 years. The present 71p share value seems to be prefer it may be low cost in comparison with the all-time excessive of 640p hit again in 2021. What’s happening right here? And with a doubtlessly enormous position in a inexperienced future, is that this a renewable power inventory that might surge lengthy into the long run?
Potential
The potential round ITM Energy is its attainable position as a key hyperlink within the Internet Zero revolution. The agency produces hydrolysers, which in easy phrases take power like that from photo voltaic or wind and convert it into hydrogen. This hydrogen will be saved extra cheaply or used for different functions.
This type of expertise guarantees to be a game-changer for international locations just like the UK, which creates lots of extra renewable power. Britain spends lots of of tens of millions of kilos a yr to show off wind generators. Hydrolysers may very well be one answer to that type of waste.
This isn’t pie within the sky stuff both. ITM Energy has been in existence since 2000 and its hydrolysers began being offered in 2010. The agency notably signed contracts to ship two 100MW hydrolysers for a plant in Lingen, Germany. It’s additionally engaged on a cope with oil big Shell.
Why has the inventory been surging this yr? It’s right down to a string of orders, largely coming from Europe. Examine the agency’s income for monetary years 2023 (£5m), 2024 (£17m) and 2025 (£26m). The following monetary yr is anticipated to return in at £40m too. That is unbelievable progress though it should be identified the agency nonetheless isn’t turning a revenue.
The longer term
So what do we’ve got right here? An thrilling inventory with a compelling progress story and surging income, with the massive caveat that it’s nonetheless pre-profit and buying and selling at over 10 instances gross sales. Cease me should you assume you’ve heard this one earlier than.
The fact is that ITM Energy remains to be a extremely speculative funding. The way forward for hydrolysers in inexperienced power is extraordinarily unsure and just about nobody can predict the place they are going to be in 10 or 20 years.
As such, I’d class this as a high-risk, high-reward inventory. I’ve a small a part of my very own portfolio in such investments. They are often massive winners, and due to this fact I’d say ITM Energy is worthy of consideration for individuals who perceive the dangers.
