Shares in alkaline fuel cell developer AFC Energy (LSE: AFC) are up by as much as 13% today after the company announced that it has successfully delivered the first power to the grid from its fuel cell facility in Germany. This is a very positive piece of news flow for the company as it is the final test stage of proving and providing electricity to the German Grid from its KORE system. It also confirms that AFC is on-track with its 11 point plan, of which it is progressing with stage 10 at the present time.
The tests results showed that power was delivered to the local grid at between 5.9 and 7.4 kW for around an hour. The test data generated will help AFC to prepare for the operation of upwards of 40 kW from eight cartridges and, with them having been delivered to its plant in Germany, it expects to complete stage 10 of its 11 stage plan before the end of the calendar year.
Clearly, AFC is a relatively volatile stock, with its share price having fallen from 58p in July to just 33p in September. However, with a greater focus on cleaner power generation across the globe and AFC being a profitable business with a bright future, now seems to be the perfect time to buy a slice of it for the long term.
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The same is true of domestic energy supplier SSE (LSE: SSE). It remains one of the most appealing dividend stocks around, with it currently yielding a whopping 5.8%. SSE, though, is far more than just a great income play, with the company being forecast to post a rise in its bottom line of 6% next year. This is roughly in-line with the growth rate of the wider index, and yet SSE trades on a price to earnings (P/E) ratio of just 13.8, which indicates that there is upward rerating potential.
In addition, SSE’s future appears to be much more stable following the General Election. While a Labour government may decide to make radical changes to the utility sector, this will not happen until 2020 at the absolute earliest. As such, SSE’s valuation is unlikely to be hurt by any sizeable political risk over the medium term, which has put a brake on its share price performance in the past.
Meanwhile, coal mining company Hargreaves Services (LSE: HSP) has released a disappointing update today which has sent its shares lower by around 11%. The company continues to struggle with a falling coal price and, since it reported its final results in August, prices have softened further by around £1 per tonne.
This, combined with the closure of the steelmaking operations at Redcar (and the falling demand for thermal coal in the UK) means that Hargreaves Services is expecting its operating profit to fall by over £4m per annum in future years. It also expects a one-off charge of £1.5m for the costs of ceasing services provided to Redcar.
Despite this, Hargreaves Services could be a sound buy at the present time. It has begun to de-leverage its balance sheet and has considerable potential to add value in the long run via its property and plant portfolio. This, alongside the scope for projects within the renewable energy sector, makes Hargreaves Services’ current price to book value (P/B) ratio of 0.65 seem good value.
