ITM Power with an Enterprise Value of £1.25bn is a company that must be congratulated. This is especially the case given the bulk of the share price rally of recent months from well below £1 at the beginning of March to 300p last week, occurred during the worst of the Covid-19 pandemic. It also occurred during a period when Crude Oil – an erstwhile competitor of Hydrogen, actually traded towards -$40 a barrel.
Of course, who knows if we are at the right value for ITM Power? This is especially the case given the way that the rollout of Hydrogen as an alternative fuel for vehicles at least, is still very much up in the air? It could be fast tracked in the next year or two, or we may be a decade away?
But those who trade on the stock market do not normally play such guessing games. Instead, they tend to try and identify the next big thing. To this end it could very well be that amongst a rather narrow universe on the LSE, the one Hydrogen stock that is still vastly undervalued is Powerhouse Energy (PHE).
Part of the reason that Powerhouse Energy remains in the bargain basement is that it is still in the process of acquiring its development partner Waste2Tricity. Waste2Tricity has been the engine for getting Peel Environmental to back Powerhouse’s waste plastic to Hydrogen technology.
Peel is to back an eleven system initial roll out to a nationwide rollout of possibly 100 systems each paying an recurring annual licence of £500k per site. Powerhouse is to be the only new wave hydrogen producer showing a highly self sustaining profitable business over the next 5 years – rising to a £50million net profit a year within 10 years – and that’s before any other country in the world steps in.
Having broken the 2p barrier in recent days, this minnow could the next ITM Power, i.e. a multi-bagger situation. The chances are Powerhouse, from a market cap of less than £50m could “do an ITM” and reach a £1 billlion plus mCap very quickly like ITM has over the course of a year. For the time being though, 4p plus looks to be a conservative price target.
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