The news on climate change keeps getting worse, so my mind is turning to the best UK energy stocks to buy now. I want to both help the climate as much as I can and protect my family for the future by being a successful investor.
A damning IPCC report out on 9 August said the world should expect more extreme weather events like droughts, hurricanes and rising sea levels. This is “code red for humanity”, one United Nations chief said.
So I’ve identified two UK energy stocks I think could help the world solve the water and energy crises we all now face.
Passive income stocks: our picks
Do you like the idea of dividend income?
The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?
If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…
Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.
What’s more, today we’re giving away one of these stock picks, absolutely free!
MTI Wireless Edge
AIM-listed Israeli firm MTI Wireless Edge (LSE:MWE) builds and supplies 5G wireless antennas for satellites. So why is it in my UK energy stocks list? Well, its water and irrigation subsidiary Mottech Water Management Systems has expanded in Canada. And it has announced a three-year, £175,000 service contract with a “major Canadian city [which has] one of the largest municipal water irrigations systems in the world”.
With wildfires raging and extreme temperatures becoming more common, I see much greater demand for these products in future.
I’ve owned MTI Wireless Edge myself in the past, and sold it for a decent profit. I think now might be a good time for me to buy back in, given the health of the business and its international expansion.
Q1 results to 31 March 2021 showed profit before tax was up 25%, with earnings per share up 20%. There are still risks though. MTI will need to keep investing heavily in its irrigation control systems, which will be costly.
UK energy stocks
One way to spot potential future stars in UK energy stocks is to watch when institutions buy in. Altair Group Investment picked up 146 million shares in EQTEC (LSE:EQT) in June. The venture capital giant now owns around 20% of the company.
EQTEC’s engineers design and build gasification facilities of up to 30MW. These energy plants can process waste materials like forest wood, vegetation and agricultural waste to produce synthetic natural gas or biofuels.
In May, the company said it had acquired a plant in Italy that could turn waste products into energy with no hazardous emissions. If successful, such energy sources will be critical for the planet in the coming decades.
The downside
Rich investors in venture capital take on big risks by investing in early stage UK energy stocks. An investment here could just as easily go to zero as anywhere else. And the company has raised money from the market recently, diluting early shareholders. This is a business with costly R&D, so it may well happen again.
On a brighter note, the £109m company says it expects to become profitable for the first time with FY2021 results. Revenues should grow from €2.2m to €15.5m with a net profit of €3.2m. For FY2022 the business has set even more ambitious revenue and profit targets of €54.9m and €8.25m
Still, if the company fails to reach this high bar, the share price could collapse.
Benjamin Franklin said nothing is certain in life, except death and taxes. To that aphorism I think we should add climate change. Investing in UK energy stocks could help insulate me and my loved ones against the worst of what’s to come, and help the planet too.
