Why this growth share rocketed 40% in November – and 420% over 6 months!

This FTSE 250 growth share has been rocketing like no other lately — up 421% in the last six months. Astonishing growers like this one usually only grab attention after the main action, yet it still seems to have fuel in the tank after jumping 40% in November. That makes it the best performer on the whole FTSE 250. Again. The stock in question is Ceres Power Holdings (LSE: CWR). The question now is obvious – can it keep doing this?

My own portfolio is built around FTSE 100 shares, but I’ve been on the lookout for a smaller, faster-growing company, and Ceres is an astonishing stand out. Naturally, that also ramps up the risk.

Ceres shares have the power

It’s a British clean energy technology leader specialising in solid oxide fuel cells for hydrogen production and efficient power generation. Its tech puts it at the forefront of the decarbonisation push, with the potential to bring green hydrogen production costs closer to fossil fuel levels in a few years.

The story gathered momentum up on 28 July when its South Korean partner Doosan Fuel Cell began mass production of solid oxide fuel cell systems using Ceres’ proprietary technology. That was a major milestone for the partnership and suggested that Ceres’ tech is ready for serious commercial use. Analysts expect royalty payments from Doosan to build in 2026.

Then on 5 November, Ceres signed a manufacturing licence agreement with Weichai Power, a global equipment manufacturer based in Shandong, China. The deal gives Ceres a further foothold in Asia-Pacific and could speed up commercial deployment thanks to Weichai’s familiarity with the technology. At least one further licence partner is anticipated next year.

Investment risks and rewards

The potential rewards are massive and there’s an AI link too, as Ceres aims to match energy-hungry data centres with flexible and greener power solutions. With a market cap of just £710m, the opportunity here could be huge.

However, investors would have to be brave to consider buying today after such a strong run. Growth shares can build momentum of their own until everything goes south. Ceres looks completely binary. Either the tech scales successfully, the licences multiply, and royalties flow, or some hitch derails everything. Also, deals with Chinese companies carry risk, particularly around intellectual property. Many Western companies now fight shy of the country.

I think someone investing today should watch for new licence deals and the first royalty revenues from Doosan and others. That’s when this share could move from a speculative spike to a real earnings story. It’s not for the faint-hearted.

Investors might consider buying today, it all depends on their appetite for risk. But they must also accept that the big gains may have already been made, and the scope for big potential losses if the shares retreat. It’s all too much for me. I’m arriving to this party just too late. For now, I’ll sit on the sidelines and watch.

The post Why this growth share rocketed 40% in November – and 420% over 6 months! appeared first on The Motley Fool UK.

More reading

• Should I buy this fastest-growing stock on the FTSE 250?
• Up 699% since April, 85% of analysts still rate this FTSE 250 stock as a Buy
• Here’s why this hot FTSE 250 stock rocketed 90% in October!

Harvey Jones 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.

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