Many newcomers in the stock market fly under the radar until they break big and attract the attention of retail and institutional investors. Finding these hidden gems before they take flight can result in exceptional gains. But it’s important to keep the potential risk in mind.
Unlike mature businesses that have been in the market for years or decades, there is relatively little data you can use to gauge the potential of these newbie stocks.
And even if they have performed well in the time they have been in the market, that may not be a guarantee of their future potential. It might be just these companies riding a positive wave upwards. That said, there are plenty of little-known stocks that show potential and may be huge if you buy now and hold on long enough for them to manifest that potential.
One such stock is First Hydrogen (TSXV: FHYD).
The company
First Hydrogen is not an entirely fresh stock, as it has been trading on the venture exchange since June 2020. It represents an even older company that was founded in 2007. The Vancouver-based company is working with two partners, Ballard, which is based in Canada and is a leader in fuel cell solutions, and AVL, a German company with the same expertise — fuel cells and an impressive portfolio.
First Hydrogen is using the technologies and solutions of its partners to build zero-emission vehicles and is planning to start with a zero-emission utility van.
Since the company also operates in the U.K. and has a German partner, its van will conform to the standards/requirements for both North American and European markets. This gives it a broader reach. The prototype promises an exceptional range of between 400 and 600 kilometres.
The company has an impressive prototype, realistic planning, and impressive partners, but its product is still in its early stages, and until it hits the market and competes against both electric vehicle equivalents and conventional vehicles, it’s difficult to predict the success potential of the business itself.
The stock
The stock has performed quite well since its inception, especially for a company whose crown jewel is still “being polished.” But thanks to its international reach and focus and a compelling prototype, the stock has outperformed the market and its sector by a significant margin. Currently, it has a market capitalization of about $219 million, so it still has a long way to be counted among the small-cap stocks.
The stock has gone up 1,373% since its inception and about 89% in 2022. The stock tends to surge when its trials or tests achieve or exceed the expectations of experts, which is something potential investors should keep an eye on if they wish to maximize their return potential with this stock.
If there are no delays in the project launch and the product (zero-emission van) meets the market expectations, chances are that the stock may explode. But it can easily go the other way if the project hits an unforeseen wall.
Foolish takeaway
If you are interested in ESG (environmental, social, and governance) investing and wish to invest in environmentally friendly companies, First Hydrogen can be considered a compelling choice. Hydrogen-based zero-emission vans might not get as much limelight as traditional electric vehicles, but they may emerge as a popular viable alternative and more practical option in the future.
