Small cap movers: Ceres leads green gains
Proactive Investors small-cap specialist Jamie Ashcroft takes a look back at a hectic week for London's growth stocks...
Ceres: The fuel cell developer that could replace traditional gas central heating boilers
Investors are waking up to the fact that there is money to be made from the clean-tech stocks.
And it's not just the weekend eco-warriors who are piling in – the armchair capitalists are now having a go, according to the buzz on the bulletin boards.
The small-cap market had a decidedly green hue to it this week as environmental stocks grabbed the limelight. The news-flow was brisk and generally positive.
On Wednesday Ceres Power, a Horsham-based fuel cell developer that could replace traditional gas central heating boilers, topped the leader board.
The firm revealed that it had cracked a calibration problem that was preventing its technology from working properly in ongoing field trials.
Since first reporting the glitch in March, the stock has fallen 65%. Ouch!
So a rebound was always on the cards. But the scale of the rally caught everyone off guard.
The stock immediately spiked more than 40%, and just kept going. As we speak, Ceres is changing hands at 60p – which represents a 150% gain for those lucky people who bought in just ahead of the announcement.
The AIM 100 Index of small-cap stocks opened on Monday below 4,000, and peaked at 4,109.87 before succumbing to profit-taking later in the week.
At midday it was up 15 points at 4035.68.
Volumes were generally muted, though dealers said they are detecting a gradual improvement in sentiment towards the market's riskier minnows.
It was an up and down week for wind-farm developer Greenko, which landed new concessions for 650 megawatts of wind-power capacity in the Indian states of Andhra Pradesh, Karnataka and Rajasthan.
It should more than double the group's 'in development' capacity to more than one gigawatt.
The share price reaction was fairly muted as the concurrent news of a discounted, £50m cash-call dampened spirits slightly.
However, it's worth pointing out that the shares – changing hands at 233p currently - are priced at just 5% below the all-time high set last week.
Ambrian Capital's cleantech expert Gurpreet Gujral thinks investors have yet to wake up to the full potential of Greenko's pipeline.
'We believe the market has placed minimal value on assets that are under development, especially those that are unlikely to be commissioned in the next six months,' the analyst said.
Elsewhere this week, Torotrak, a main market listed firm, valued at around £90m, revealed that its proprietary gear technology is being adopted by Volvo for a new range of low emission hybrid cars.
The news boosted the shares by around 10% as they reached an intra-day high of 53p, Torotrak's highest level since March 2007.
Trading settled down somewhat after this initial spike, and it looks set to close the week practically unmoved at around the 50p mark.
According to Torotrak, the Volvo deal is another powerful opportunity to demonstrate the contribution that mechanical hybrids can make to reduce emissions and improve fuel economy.
China New Energy, the bio-fuel specialist that joined AIM last week, was among the top performers.
The stock listed on 23 May with a modest £655,210 placing that valued the whole company at £20.8m. After an 80% leap in the share price (currently 12.75p) it is now worth almost £38m.
In the resources sector, Falklands oil exploration was back on the agenda earlier this week.
Firstly on Tuesday Desire Petroleum unveiled two new prospects, found via its recently-completed seismic exploration programme.
The news provided a much-needed boon to the shares, which have suffered due to the group's unsuccessful drilling campaign.
At the start of a new exploration cycle it seems Desire is starting to rebuild its pipeline of prospects, whether it will get a chance to drill them remains to be seen – it must raise new funds before it can drill another well.
Then on Wednesday Rockhopper Exploration revealed that its latest Sea Lion appraisal well had been highly successful.
It found a very thick, high quality reservoir package and a substantial oil column. Desire gained 27% this week, rising 3.35p each to 15p, while Rockhopper added 66.5 pence, a 33% gain, with the stock reaching 269p.
Specialist water treatment firm The Nature Group was in the news for all the wrong reasons after an explosion at its waste treatment facility in the Port of Gibraltar on Tuesday.
It expects the plant to be operational only after a clean-up of the site. The shares have dropped around 25% since the incident was first announced.
Jamie Ashcroft is a spcialist at Proactive Investors, a portal for investors interested in growth stocks. To find out more go to www.proactiveinvestors.co.uk.
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