Ceres Power: an electrifying future for this fuel cell stock?

The technology could be integral to electric vehicles being more practical.

13th April 2021 08:41

The technology could be integral to electric vehicles being more practical.

Ceres Power

We've long been devotees of 'fuel cell technology' of the sort practised by Ceres Power (LSE:CWR).

We firmly adhere to the belief that the current fad for rechargeable vehicles shall prove an error until such time that battery wizardry catches up with real world demands.

The recent boast by Range Rover, promoting their coming all electric offering, brought a fairly major question mark. How far will it pull a horse box on a single charge? This is one of the issues electric vehicles will face, an issue which cannot yet be resolved, as towing weight completely stuffs the potential driving distance.

Fuel cell technology, on the other hand, allows the drive train to be electric, just needing to snort some hydrogen or even natural gas from the mains to produce copious levels of electricity.

Rather amusingly, Ceres boasts efficiency levels of up to 90% if their system is used for heating water. Immediately, a mental picture of a return to steam trains emerged, the water condensed by fuel cells rather than coal!

Sooner or later we suspect a major manufacturer or builder shall adopt this technology as the energy savings are impressive, along with massive reductions to CO2 emissions and other pollutants being virtually eliminated.

Obviously, such adoption should prove game changing for a company such as Ceres, already enjoying a seven-fold increase in their share price during the last 12 months.

Of course, our interest in the potential of this company also has a further tantalising starting point.

As the chart below shows, back at the initial share launch the price experienced the usual overhyped trajectory. Long-term true believers who bought into the frenzy found themselves trapped for a prolonged period.

It's truly unusual to be able to offer hope to those unfortunates, but in the case of Ceres there are some quite surprising calculations available. Despite the 10:1 share consolidation in 2018, the highs in January this year of above 16 quid fascinated us. We'd calculated a best-case scenario of 1,440p, the share exhibiting sufficient strength to exceed this level.

Presently trading around 1,220p, the price now needs to exceed 1,290p to trigger initial growth to 1,508p with secondary, if exceeded, coming in at 1,792p.

This secondary is liable to prove a big deal for the longer term, hopefully allowing the share price to close at a higher high, along with closing above the blue downtrend since 2008.

In such a scenario we shall need to revisit the numbers, but amazingly we can currently mention the big picture gives a ruling ‘maximum’ target of 4,750p. This impressive number makes us understandably nervous, but should Ceres start trading above blue on the chart, strong potentials become possible.

We'd be very nervous if any excuse is found to reverse the price below March's 960p, as it risks triggering a reversal cycle toward 453p. This appears to be a share worthy of some research.

Source: Trends and Targets. Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.

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