ITM Power (LSE:ITM) shares have had a rough 2022. Just today, its shares fell a whopping 26% after its full-year results were released.

Also, the news of CEO Dr. Graham Cooley stepping down after 13 years in charge and a new €140bn EU windfall tax on renewable energy firms’ profits contributed to the decline.

Looking at the ITM Power share price action, this fall is not sudden. The stock has plummeted 54.5% in a month and 71% in a year. Considering the amazing year energy stocks have had, this does not look good.

Here I will look at the results, what to expect moving forward and if I will make an investment in ITM Power shares after this historic collapse.

Is net zero just a dream?

The UK’s 2050 net-zero ambitions are lofty, considering how powerful fuel companies are today. The oil lobby is still extremely influential and holds the resources and infrastructure needed to make the transition possible.

But with the larger global economy in an uncertain position, the green energy transition is proving too expensive, causing a huge spike in bills for most people.

Any positives for ITM Power shares?  

Firstly, hydrogen fuel is the only net-zero energy source we know. Its by-products are reusable. It doesn’t remove oxygen from the atmosphere or add more water vapour, creating a balance.

ITM Power manufactures electrolyser systems and develops plants that generate this clean hydrogen fuel. It also operates seven hydrogen refuelling stations and a 1GW-capacity factory in the UK.

In 2022, the company saw its contract backlogs increase by 79% to 755 MW. As a result, revenue jumped over 30% to £5.6m, coupled with a significant increase in assets and inventory.

But the company recorded a gross loss of £23.5m in FY 2022. The board expects this figure to increase to £45m-£50m next year given the company’s high R&D budget.

Also, to complete current contracts, ITM Power would have to significantly increase production capacity. The company raised £250m to expand energy output to 5GW by December 2024. But the board stated in the release that achieving this target after the current energy crisis will be very tough.

Due to mounting expenses, the company’s plans to set up a new factory were scrapped. Now, ITM Power is working on improving output from its Bessemer Park factory to 1.5GW. But this could be too little given the growing demand.

Should I buy ITM Power shares right now?

As a potential investor, I see a lot of green energy stocks still carrying significant risks given the demand to accelerate development. ITM Power has this issue too. Yes, a lot of government grants and private contracts are being signed by the firm. But scaling up in the current economic and political climate will cost billions.

With the demand for cheap energy at an all-time high, I think green energy explorations will take a back seat over the coming months.

ITM Power shares are currently crashing and I never try to catch a falling knife. Once signs of a turnaround are clear, I would re-evaluate my position. But right now, I wouldn’t touch it with a 10-foot pole.

The post Down 26% in a day! ITM Power shares are falling fast. Here’s what I’d do appeared first on The Twelfth Magpie.

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• These 2 FTSE 250 companies are big Stocks and Shares ISA favourites in June. Time to buy?
• Down 30% in 2 weeks! Is ex-penny stock ITM Power now too cheap?
• Why are ITM Power shares 69% off?

Suraj Radhakrishnan 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.

Many long-term investors in ITM Power (LSE: ITM) will have done incredibly well. Those who had the foresight to buy the shares almost five years ago and sell early in 2021 would be sitting on gains of around 2,100%. Since then, the tide has turned. The ITM share price is now roughly 42% below where it stood at the end of January. Will June’s trading update change things? And should I take advantage of the price drop?

ITM: The story so far

Let’s recap. ITM is a highly promising hydrogen energy storage and clean fuel company. Put simply, analysts believe the element — and the AIM-listed business — could play a huge role in decarbonisation (returning levels of CO2 in the atmosphere to more natural levels).

Back in 2015, ITM signed an agreement with Shell for hydrogen refuelling stations. A couple of years ago, this was extended to include forms of transport such as buses, trains and ships. In 2019, the company also announced a joint-venture with engineer Linde to deliver renewable hydrogen to industrial projects across the globe. 

In more recent news, ITM revealed that it had signed a collaboration agreement with (and received strategic investment from) Italian energy infrastructure firm Snam. Other developments include the opening of a gigafactory in Sheffield.

The ITM share price: where next?

The quick answer to where the share price is going is that no one knows for sure. A slightly more involved response is that it really depends on whether the company meets, beats or falls short of investors’ expectations on 10 June. Despite recent operational progress, the last of these is clearly possible. 

Back in January, ITM reported results for the six months to the end of October. For me, two numbers stood out. The first was a 92% drop in revenue to just £200,000, partly due to Covid-19 disruption. The second was a 28% rise in the adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) loss to £10.4m. Despite recent investment helping accelerate the company’s growth strategy, things could get worse before they get better.

Even if ITM shareholders accept this, more general market moves could still have a bearing. Right now, investors are shunning growth for value. This could prove problematic for the ITM share price’s near-term performance.  So, even better-than-expected news in June (thanks to the lifting of restrictions) may not change the stock’s trajectory. The company’s low free float — the number of shares available to trade — could also amplify any fall. Of course, the opposite is also true.

Not for me….yet

The potential for hydrogen-focused companies is massive. Unsurprisingly, ITM thinks its “rapidly developing backlog and tender pipeline” is evidence of its “world class” offering. 

I’m keeping my feet on the ground for now. Let’s not forget that the advent of the internet saw many companies coming to the market only to quickly disappear following the dotcom bust. A similar scenario may play out here. ITM could well prove to be one of the victors, but there can be no guarantee. When hype meets reality, the latter wins eventually.

Taking my own risk level into account, buying a clean energy fund remains the best strategy for me. This way, my money is spread across many companies rather than just one. Options here include the Invesco Global Clean Energy ETF or my favourite, iShares Global Clean Energy ETF.

The post Where will the ITM Power share price go in June? appeared first on The Twelfth Magpie.

More reading

• These 2 FTSE 250 companies are big Stocks and Shares ISA favourites in June. Time to buy?
• Down 30% in 2 weeks! Is ex-penny stock ITM Power now too cheap?
• Why are ITM Power shares 69% off?

Paul Summers owns shares in iShares Global Clean Energy ETF. 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.

But since then, it’s fallen by nearly 35%. What happened? And is this a buying opportunity for my portfolio? 

What’s going on with ITM Power’s share price

ITM Power is a hydrogen supplier. The company designed and developed a technology that uses electrolysis to convert water into its base elements, namely hydrogen and oxygen. Given that the classic approach of extracting hydrogen requires fossil fuels and isn’t exactly environmentally-friendly, ITM’s zero-emission solution sounds promising. At least, I think so.

In 2020, the UK government announced new legislation that aims to eliminate carbon emissions by 2050, focusing particularly on utilising green hydrogen. This was fantastic news for the company. And with good progress being made in its existing projects with Honda, Nissan, and Royal Dutch Shell, its share price took off. So why is it falling now?

The pandemic has caused disruption to many businesses, and ITM Power is no exception. Due to government restrictions, there were numerous delays in the installation of its technology across multiple projects. Consequently, overall revenue generated between May and October last year fell by a massive 92%, and losses increased by 22%. Needless to say, this isn’t good news. A sudden decline in ITM’s share price is understandable in this context.

Reasons to be optimistic

The decline in revenue is undoubtedly bad. But it’s worth noting that this income is delayed and not lost. The disruption from Covid-19 is ultimately a short term problem. And once project instalments can resume, ITM’s management team expects approximately £3.1m of revenue flowing into the business.

As such, analyst forecasts indicate expected revenue of £6.7m by April 2021 that should surge to over £32m a year later. That’s nearly a 900% increase compared to what was generated in 2019.

Whether the firm can meet these expectations has yet to be seen. But it does appear to be on track. It recently announced plans to extend the capacity of its Shell refinery project by 100MW. And it also completed its first electrolyser sale in the Japanese market, further establishing its international presence.

The bottom line

I continue to admire ITM’s technology and the impressive progress the company has made over the last few years. However, as I’ve previously discussed, the valuation still looks exceptionally expensive. Even after the recent share price decline, ITM’s market capitalisation is around £2.5bn. Assuming it can achieve the expected £32m revenue in 2022, that places the stock at a price-to-sales ratio of 78.

To me, this looks like a classic case of ‘great business, bad stock’, and so it’s staying on my watch list for now.

The post The ITM Power share price is falling! Should I buy today? appeared first on The Twelfth Magpie.

More reading

• These 2 FTSE 250 companies are big Stocks and Shares ISA favourites in June. Time to buy?
• Down 30% in 2 weeks! Is ex-penny stock ITM Power now too cheap?
• Why are ITM Power shares 69% off?

Zaven Boyrazian does not own shares in ITM Power. 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.

After that kind of stunning performance, ITM Power shares are now getting plenty of attention. But is the AIM-listed stock worth buying today? Let’s take a look at the investment case.

What does ITM Power do?

ITM Power is a clean-fuel company that specialises in hydrogen energy solutions. Those solutions are designed to take excess energy from the power network, convert it into hydrogen, and then use this form of clean energy in a wide range of applications.

In October last year, the company entered into a 50/50 joint venture (JV) with multinational chemical company Linde – a world leader in industrial gases and engineering. This JV will focus on delivering green hydrogen to large-scale industrial projects.

A renewable energy play

ITM Power certainly appears to have a lot of potential, in my opinion. In a world that’s increasingly focusing on sustainability and climate change, renewable energy is undoubtedly the way forward. So ITM should benefit from powerful tailwinds in the years ahead.

The market for ITM’s hydrogen solutions appears to be vast. For example, hydrogen energy can be used to refuel electric cars, buses, and trains. It can also be used to help provide heating and cooling to our homes. Additionally, it can be used in industries such as mining and steel production to make processes more environmentally-friendly and safer.

Overall, ITM appears to have an exciting future. Partnered with Linde, the company looks well-placed to benefit from the shift towards renewable energy, in my view.

Risks to be aware of

That said, there are a number of risks to be aware of here. For a start, ITM Power isn’t yet profitable. The company is generating revenues however, it’s still losing quite a bit of money.

For example, the group’s most recent half-year report showed a loss from operations of £9.8m, up 85% on the loss of £5.3m the year before. Meanwhile, the company recently advised it’s expecting an expected EBITDA loss for the year ended 30 April of £17.5m. I tend to steer clear of unprofitable companies these days as I’ve found, over the years, they often end up being poor investments.

Secondly, after the strong rise in the share price, the company now has a formidable market capitalisation. When the market closed on Friday, ITM’s market-cap was a lofty £1.5bn. Given that sales last year were just £4.6m, that seems high to me.

It’s also worth pointing out that ITM insiders have been offloading shares recently. Last week, CEO Graham Cooley, CFO Andy Allen, CTO Simon Bourne, and executive director Rachel Smith all sold shares. This could be interpreted as a bearish signal – it suggests they believe there’s limited upside potential in the near term.

Are ITM Power shares worth buying today?

Weighing everything up, ITM Power shares look a little too risky for my liking. The company certainly looks to have potential. However, given it’s not yet profitable, I see it as a high-risk speculative play.

All things considered, I think there are better stocks to buy right now.

The post ITM Power shares are up 800% in a year. Here’s what I’d do now appeared first on The Twelfth Magpie.

More reading

• These 2 FTSE 250 companies are big Stocks and Shares ISA favourites in June. Time to buy?
• Down 30% in 2 weeks! Is ex-penny stock ITM Power now too cheap?
• Why are ITM Power shares 69% off?

Edward Sheldon has no position in any 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.

As such, valuations could be relatively low, while the performance of some industries could still be impressive. With that in mind, I feel oil producer Genel Energy (LSE: GENL) could offer growth potential alongside another energy company which released an update on Monday.

Future potential

The company in question is energy storage and clean fuel business ITM Power (LSE: ITM). It released a trading update to coincide with its AGM, with the company’s trading in the current year having started well. It expects another year of significant financial progress, with underlying project delivery being on track and its financial position being strong. It has £16.9m of cash, while it has a total pipeline of £34.3m. This represents an increase in the size of its pipeline of £3.7m since August, with the non-contracted tender opportunity pipeline being £200m.

The company’s planned move to its new factory is progressing well. It is expected to sign terms in the first quarter of 2019. The new factory should to run in parallel to the existing one until the lease runs out in 2021. During that time it is expected to provide sufficient capacity to support its ambitious sales growth plan. As a result, the stock could offer an improving outlook. While still loss-making and potentially risky, its long-term growth potential could improve as consumers continue to demand cleaner forms of energy.

Value for money

As mentioned, share prices have fallen in recent months. Although Genel Energy is down by 25% since May, its shares are still up by 90% over the last year. The outlook for the oil and gas sector may be relatively uncertain, with the prospect of a slowing world economy unlikely to have a positive impact on demand. But with geopolitical risks in countries such as Saudi Arabia and Iran, there could be a commensurate decline in supply over the medium term. As such, the outlook for the industry may be volatile, but also positive over the next few years.

Although Genel Energy’s shares have risen significantly in the last year, they continue to offer good value for money. The company trades on a price-to-earnings (P/E) ratio of around 6. And with its operational performance having the potential to improve, I feel it could offer further capital growth prospects over the medium term.

Certainly, the company’s shares could record further losses if fears surrounding the global economy persist. The oil price has a track record of being volatile, which could lead to a wider margin of safety being applied to its shares. But with a low rating and the prospect of supply disruption in the wider industry, the company’s shares could perform well versus the FTSE 100.

The post 2 reasons why I think the Genel share price could outperform the FTSE 100 appeared first on The Twelfth Magpie.

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• These 2 FTSE 250 companies are big Stocks and Shares ISA favourites in June. Time to buy?
• Down 30% in 2 weeks! Is ex-penny stock ITM Power now too cheap?
• Why are ITM Power shares 69% off?

Peter Stephens 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.

Of course, Shell is not the only energy-related stock which could be worth buying. Reporting on Monday was an alternative energy company that could be a strong performer in the coming years.

Improving outlook

The oil price could continue the rise which has seen it move increasingly closer to $100 per barrel in recent months. Although the consensus among major oil-producing nations is for higher production over the medium term, the reality is that supply disruption remains a serious threat to global supply. The political outlook for Iran could lead to reduced production which is unable to be offset by higher production elsewhere. And with Venezuela also facing a period of political instability, it would be unsurprising for demand growth to exceed supply growth over the medium term.

This would clearly be good news for Shell. Even after its share price rise of recent months, it continues to offer a wide margin of safety given its diverse asset base. It has a dividend yield of 5.5%, which remains historically high for the company and suggests that investors remain cautious about its outlook.

Certainly, there is scope for further volatility in the stock’s valuation. The oil price could fall, for example, and hurt investor sentiment. However, with the company seeking to utilise its rising free cash flow to reduce debt and it being engaged in an asset disposal programme, its future appears to be highly sustainable. As such, the potential for a higher oil price and its low valuation mean that Shell could be a sound retirement stock.

Growth potential

Of course, cleaner forms of energy are likely to become increasingly in demand among consumers over the long run. As such, investing in energy storage and clean fuel company ITM Power (LSE: ITM) could be a shrewd move. The company released final results on Monday which showed that it continues to deliver on its development potential.

It was able to increase revenue by 53% versus the prior year, with it focusing its efforts on increasing headcount and planning larger production facilities. They could help it to deliver on its ambitious growth plans, while it seeks to maximise a growing portfolio of revenue-generating assets in the shape of the first real hydrogen refuelling network in the UK.

With ITM Power having raised £29.4m of working capital during the year, it appears to have the financial firepower to invest for future growth. While a lossmaking business today, in the long run it could deliver impressive financial performance and a rising share price.

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More reading

• These 2 FTSE 250 companies are big Stocks and Shares ISA favourites in June. Time to buy?
• Down 30% in 2 weeks! Is ex-penny stock ITM Power now too cheap?
• Why are ITM Power shares 69% off?

Peter Stephens owns shares of Royal Dutch Shell B. 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.

While natural gas is a relatively clean fossil fuel and could therefore provide Shell (LSE: RDSB) with growth potential, could a cleaner energy company prove to be a superior investment in future years?

A changing landscape

While the election of Donald Trump as US president may have caused spending and focus on climate change to reduce, it is likely to remain a constant theme in political and economic spheres in future years. This is partly because of population growth, with the world’s population forecast to rise by around 34% between now and 2050. This is likely to cause even greater levels of carbon emissions in future years unless the types of energy used change significantly.

Shell is therefore relatively well-placed to benefit. It has invested heavily in natural gas production, particularly with its acquisition of BG. This could help to improve Shell’s sustainability since gas is a much cleaner-burning fuel than other fossil fuels such as oil and coal. And since the company has a highly diversified asset base and sound finances, its overall investment potential remains sound.

An even better option?

However, the reality is that clean energy could be an ever stronger growth sector than natural gas. Reporting on Tuesday was manufacturer of integrated hydrogen energy solutions, ITM Power (LSE: ITM). It announced an increase in projects under contract of £5.66m in the last 11 weeks, which takes its total to £22.6m. This has been aided by progress made on cost reductions of ITM Power’s technology. Further sales could lie ahead, with various exhibitions and showcases planned over the coming months.

Clearly, hydrogen energy solutions are not yet mainstream. There is uncertainty as to whether they will ever become so – even in the long run. However, ITM seems to have a sound strategy to improve its financial performance, with investors having bid up the price of its shares by 67% in the last year. And with the UK government announcing a £23m funding competition for hydrogen refuelling stations, it could prove to be a growth area in the long run.

Risk/reward

Clearly, ITM Power lacks the financial strength, diversity and stability of Shell. However, it also potentially has higher rewards in the long run. Therefore, it could be worth a closer look for less risk-averse investors.

Despite this, Shell may still offer the superior risk/reward ratio. It has a dividend yield of almost 7%, is expected to generate significantly higher free cash flow in the next few years and there remains high growth potential within the natural gas sector. Therefore, while ITM Power may be a worthwhile investment, Shell seems to offer the better balance between risk and reward.

The post Is this small-cap energy stock a better buy than Royal Dutch Shell plc? appeared first on The Twelfth Magpie.

More reading

• These 2 FTSE 250 companies are big Stocks and Shares ISA favourites in June. Time to buy?
• Down 30% in 2 weeks! Is ex-penny stock ITM Power now too cheap?
• Why are ITM Power shares 69% off?

Peter Stephens owns shares of Royal Dutch Shell B. The Motley Fool UK has recommended Royal Dutch Shell B. 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.

You’ve got the power

Energy storage and clean-fuel company ITM Power (LSE: ITM) is operating in an exciting but high-risk area, with plenty of potential but also the danger of going bust on the coin-flip of government policy or technological change. Right now, it’s going from strength to strength, as it looks to expand its UK hydrogen refuelling stations and contracts. The £49m market cap posted a full-year pre-tax loss of £4.36m in July but has just signed two high-profile refuelling contracts this month.

The first was with Hyundai Motor UK, for refuelling its iX35 Fuel Cell Vehicle fleet. Hyundai joins Toyota, Commercial Group, Arcola Energy and Arval as fuel customers. ITM currently has £16.85m of projects under contract and a further £4.15m of contracts in the final stages of negotiation, making a total of £21m, up from £16.32m in July. Just 10 days later it added Europcar UK to the list, creating what ITM chief executive Dr Graham Cooley called the largest privately owned fleet of hydrogen cars for chauffeur drive and corporate rental.  

Bucks fizz

Last week it was granted full planning permission from South Bucks District Council to construct a hydrogen refuelling station (HRS) at the Shell filling station, Beaconsfield, to open next spring. It also has full permission for other HRS ops at Shell stations based in Gatwick, Kollam and Cambridge. Jane Lindsay-Green, Shell UK retail future fuels manager, hailed it as another example of Shell’s commitment to providing low carbon fuels for the future.

ITM’s share price has doubled to 24p since hitting a low of 12p in mid-February, leaving it close to its 52-week high. Its increasingly impressive pipeline augurs well for its early-stage technology, but it still has a long and risky road ahead of it.

Unsure of Shell

You could say the same about oil giant Royal Dutch Shell (LSE: RDSB) right now, as it continues to feel the pain of the low oil price. Brent Crude is rising towards $47 a barrel over growing hopes that Saudi Arabia will drop its ‘pump and dump’ oil policy, after failing to drown US shale drillers. The recent discovery of the 20bn barrel Wolfcamp Shale geologic formation in Texas, which also contains an estimated 16trn cubic feet of natural gas and 1.6bn barrels of natural gas liquids, suggests supply could remain high whatever Opec decides. So don’t expect salvation from this quarter.

Chief executive Ben van Beurden has worked hard to offset falling oil, gas and liquefied natural gas prices by cutting costs and bolting on February’s acquisition, BG Group, and this helped boost Q3 earnings by 18% to $2.8bn year-on-year, easily beating consensus forecasts. The share price is up 25% over the past year, partly due to Brexit, as its dollar dividend is now worth more to UK investors, but Shell still yields a juicy 5.87%. Net debt of $77.8bn is a worry, and cheap oil could continue to inflict damage. Remarkably, ITM looks to have a smoother path ahead of it right now.

The post Is ITM Power plc or Royal Dutch Shell plc the energy company of the future? appeared first on The Twelfth Magpie.

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• These 2 FTSE 250 companies are big Stocks and Shares ISA favourites in June. Time to buy?
• Down 30% in 2 weeks! Is ex-penny stock ITM Power now too cheap?
• Why are ITM Power shares 69% off?

Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Equiniti Group

Specialist technology outsourcer Equiniti Group (LSE: EQN) has had a good month, its share price rising nearly 15% in that time, and today’s half-year report has handed it a further lift. Revenue growth was a decent 5.9%, with organic revenue growth of 4.3%. It also reported 12% revenue growth from cross-selling and up-selling to its top 32 key accounts. Net debt has dropped from £471m to £261m, a fall of 44%, reducing company leveraging from 5.5 to 2.9. Acquisitions have been integrated well.

Equiniti’s profits have benefitted as it has signed longstanding contracts with many of the biggest firms in the country, giving it a broad base of revenue streams. As a share registrar it may benefit from the weaker pound, as this may attract further overseas buyers in the wake of the ARM Holdings deal. The company can perform well in troubled economic times, when many companies raise emergency cash through rights issues. Today, chief executive Guy Wakeley hailed a “strong top line and profit progression whilst reducing leverage.” Forecast earnings per share growth of 12% this year and 9% next, and a valuation of 12.48 times earnings, make the stock worth a look. Especially with the yield forecast to rise from 0.4% today to a more impressive 2.8%.

Paragon of virtue

Property firm Paragon Group of Companies (LSE: PAG) posted a 12.1% rise in underlying profits to £109.9m for the nine months to 30 June. That’ solid growth given that normal trading had been disrupted by the stamp duty surcharge on buy-to-let property purchases and by Brexit uncertainty. The referendum result could still swing a nasty surprise, although management said it’s too early to know for sure.

Despite the surcharge, buy-to-let lending for the nine months to 30 June rose 21.2% to £989.6m, although we might expect to see that slow in the future, as landlord caution grows. Paragon’s pipeline has dipped to £339m from £350.6m at the start of the quarter. It has protected itself with a disciplined approach to pricing and credit, hiking minimum affordability tests in January 2016 to reflect looming cuts to landlord tax relief. The buy-to-let market could be bumpy for some time, which is reflected in Paragon’s current valuation of 7.51 times earnings.

Get the power

Energy storage and clean-fuel company ITM Power (LSE: ITM) posted a full-year pre-tax loss of £4.36m this morning, a mild improvement on the £5.72m it lost a year ago, helped by a £300,000 increase in revenue to £1.93m. The £35.79m market cap minnow currently has a total pipeline of £16.32m, with £15.81m of projects under contract and a further £0.51m of contracts in the final stages of negotiation.

Markets responded positively, with the share price up more than 3% in the morning, helping continue the share price recovery of recent months. However, at today’s 16p, it’s still well below its 52-week high of 30p. Clean fuel should be a global growth area and ITM has struck a hydrogen fuel contract with Toyota and a strategic forecourt siting partnership with Shell. In May, ITM hit the headlines by launching London’s first HyFive hydrogen refuelling station and its two working power-to-gas reference plants in Germany are attracting global attention. But early stage technology like this is a risky power play for investors.

The post Have today’s results thrown up three hidden winners? appeared first on The Twelfth Magpie.

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• Down 30% in 2 weeks! Is ex-penny stock ITM Power now too cheap?
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The proceeds from the placing will be used to strengthen ITM’s balance sheet and support its commercial relationships. And on this front ITM appears to be making encouraging progress, with its results for the first half of the year indicating improvement.

For example, ITM has increased revenue by 27% versus the first half of the previous year and has been able to narrow its loss from operations by 14% to £3.17m. Furthermore, the company has agreed a strategic siting partnership with Shell to locate three hydrogen refuelling stations on Shell forecourts in the UK. And with ITM also launching its first hydrogen refuelling station in Rotherham (close to the M1 motorway), it appears to be making pleasing progress with its long-term strategy.

Fossil Fool?

Of course, clean energy is becoming an increasingly important consideration for the world. With climate change being of major importance to governments globally, it’s likely to continue to become a key growth area in the long run. As such, many investors may feel that buying a clean energy company such as ITM is a better idea than adding a slice of a fossil fuel-focused company such as Tullow Oil (LSE: TLW) to a portfolio.

However, this may not be the case. That’s because fossil fuels are still expected to form a major part of the energy mix for the coming decades. That’s especially the case in the developing world, where although the use of cleaner fuels is forecast to rise, oil and gas are likely to remain prevalent over the long term. As such, and even though the price of oil has collapsed, buying oil stocks such as Tullow Oil could still be a highly profitable move.

Looking ahead, 2016 is expected to be a very exciting year for Tullow Oil. That’s at least partly because its Project TEN in Ghana is expected to begin production in the middle part of the year and this will significantly increase Tullow Oil’s production. The result of this is forecast to be a rise in pre-tax profit from £67m in 2015 to £142m in 2016 and this could have a hugely positive impact on investor sentiment and on Tullow Oil’s valuation.

In addition, Tullow Oil’s ramping-up of production is set to generate substantially higher cash flows in future years and this could fund rapid dividend rises. Although income seekers may be put off Tullow Oil by its high degree of volatility, it could become a top notch income play to add to its potential as a strong growth play over the long run. Therefore, while ITM may be worth a closer look, Tullow Oil seems to be the preferred choice at the present time.

The post Does ITM Power plc’s Update Make It A Better Buy Than Tullow Oil plc? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Royal Dutch Shell. The Motley Fool UK has recommended Royal Dutch Shell B and Tullow Oil. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.