One in particular is Quadrise (LSE: QED), a tiny London‑listed technology company aimed at reducing carbon emmissions. The stock is up 50% over the past month and continues to climb even as oil prices slump.

Could this be an opportunity for early investors to get involved in a much-needed energy transition?

Why energy needs a makeover

The recent Hormuz closure sent Brent crude soaring by double digits, before crashing again on the news of a ceasefire. Now it’s partially open but the situation could change quickly, so investors cannot assume the crisis is over.

These price swings highlight a problem the world has known about for years: the global economy is too dependent on oil. When supply looks shaky, everything from airline tickets to home energy bills can increase drastically.

Energy alternatives are often touted mainly on climate grounds but energy security is rapidly becoming a more pressing argument. If heavy industry, shipping and power generation can switch to a wider range of fuels, the risk from any single chokepoint is lower.

Where Quadrise plays a part

Quadrise looks on track to become a critical part of the energy transition. It develops ‘oil‑in‑water’ emulsion fuels that can replace conventional heavy fuel oil in large engines and boilers.

These fuels mix heavy oil or bio‑based feedstocks with water and special chemicals to create a fine emulsion. This burns more cleanly and efficiently than standard fuel oil.

The latest sustainability report stresses a focus on decarbonising shipping and heavy industry, with trial projects planned or under way in Europe, the Americas and North Africa.

Engine tests have shown that MSAR and bioMSAR can run in existing equipment at high loads, which is crucial if big fleet owners are to consider switching.

The finances behind the story

Financially, Quadrise is still very much an early‑stage, speculative play. Recent data suggest annual revenue of only around £40,000 and a market value just above £50m. Like most penny stocks, this is a bet on future success rather than current earnings. 

Recent losses have improved from about £4.84m in 2020 to roughly £3.1m in 2025, driven by cost control as projects move from pure development toward field trials.

The balance sheet is relatively clean, with equity of about £7.82m and very little debt, but cash reserves are modest at around £3.9m, so further funding could be needed if revenues do not ramp up quickly.

Risks to consider

Quadrise is a penny stock with a small market capitalisation and limited trading volume, so the share price can be highly volatile. It depends on successfully completing commercial trials with large partners and then signing long‑term supply or licensing deals.

Any delays, cancellations or technical setbacks could negatively impact the share price.

Encourangingly, it recently renewed its exclusive supply and collaboration agreement with specialty‑chemicals group Nouryon, securing access to key emulsifier chemicals and shared intellectual property.

For British investors with a 10-20 year outlook, it can be tough to envision where it fits within a portfolio. But for those that believe the energy transition has legs, I think it’s worth considering.

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On the rise

I’m talking about Quadrise (LSE:QED). The business is a UK-based energy technology company focused on developing and commercialising alternative fuel solutions. When we’re talking about alternative fuel, we’re primarily looking at low-cost, low-emission alternatives to heavy fuel oil. Some of the sectors that would most benefit from this are marine shipping, power generation, and other industrial areas. In short, this is a huge target market.

The business makes money mainly by licensing out its proprietary technology to refineries and power plants. It’s not an exploration firm or direct producer, but it has these types of companies partnering with it to use its technology. Sometimes, deals are structured in such a way that it gets a margin on the end fuel sales.

Good momentum building

The share price has rocketed 170% in the last year, currently trading at 3.64p. Most of this jump came late last year following big news releases. One was an agreement with Sparkle Power, a thermal power producer in Panama, to supply a manufacturing unit at the power plant. This was the first trial on that specific engine type, giving investors optimism that the tech can be used in a much broader range.

At the start of this year, it also announced an agreement with the European Climate Agency (CINEA) to help work on reducing greenhouse gas emissions and energy efficiency for marine vessels. The potential for grants, contacts and new deals from this is large.

I believe more deals like these will put the business in a really strong position to grow in coming years. As the world pivots to renewable energy, Quadrise has an advantage in providing an alternative for key sectors that simply can’t flip to using something like wind or solar energy.

Risks to note

Like most penny stocks, the main risk I see for Quadrise is the volatility in the share price. It hit 8p at the start of this year. So even though it’s up 170% in a year, some investors that bought at the top would be down over 50% right now. Given the low market-cap, even relatively small market orders can cause a large stock reaction.

Another concern is that Quadrise might get bought out by a larger company. Even though it has patents, big producers or refiners could find ways to tweak and replicate the technology with a more extensive research and development budget.

Even with these concerns, I think it’s a stock worthy of consideration for investors who are comfortable with the risk of owning penny stocks.

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Recently I’ve stumbled across two more very young but potentially explosive penny stocks that I’m keeping a close eye on. Let’s take a look.

A new fuel standard for cargo ships?

As the world starts to ramp up its efforts to slow and eventually reverse climate change, new solutions are being employed to cut carbon emissions. Renewable technologies like wind turbines, solar panels, and batteries are becoming widespread throughout the energy sector. Meanwhile, electric cars are on the road to being the new standard vehicle type within the next decade.

Unfortunately, the ocean-bound transportation industry has yet to see any such technological shift. Currently, cargo ships account for around 3% of global emissions. That may not seem like much, but it roughly equates to 1.09bn tonnes of carbon dioxide every year. And to make matters worse, this figure is expected to increase by up to 250% by 2050.

That’s why Quadrise Fuels (LSE:QFI) has piqued my interest. This early-stage (and I mean very early stage) penny stock has created a new fuel called bioMSAR. It is lighter, cheaper, and more efficient than traditional cargo ship fuel. And best of all, the carbon emissions are approximately 30% lower.

As promising as this alternative fuel may be, there remains a long road ahead. BioMSAR is still in its testing phase, albeit testing is running at an accelerated pace. The next set of testing results is expected to arrive this month. I’m eagerly waiting to see how it turns out. But for now, Quadrise is staying on my watchlist.

 A rising penny stock in the cannabis sector?

The legal marijuana industry is still firmly within its infancy in the western world. Yet its rapid adoption, especially in the medical sector, has led to the market size growing by double-digit percentages. According to Grand View Research, the industry is forecast to grow by 26.7% each year until 2028.

That’s why Kanabo (LSE:KNB) has become an interesting company for me to follow. It develops and manufactures a collection of cannabidiol-based products designed for health & wellness applications. These products are used in combination with its hopefully-soon-to-be certified inhalation device called VapePod MD. I say hopefully because it remains entirely possible for the application to be rejected by regulators.

However, assuming its medical device receives approval, this penny stock may be on the verge of launching an incredibly lucrative ‘razor and blade’ type of business model. And with its production and disruption infrastructure now in place thanks to recent partnerships, the Kanabo share price looks like it’s almost ready to start surging.

But, just like Quadrise, Kanabo has yet to begin generating any substantial revenue. And so, once again, it remains quite a speculative investment with plenty of risks. And there are regulatory challenges that are likely to arise in the future, given the controversial nature of cannabis use. Therefore it’s another penny stock that’s staying on my watchlist for now.

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It’s all about synthetic heavy fuel oil (HFO). My Motley Fool colleague Zaven Boyrazian has explained it. In short, HFO is a fuel derived from oil and used by cargo ships. But it’s not exactly clean — it’s big in greenhouse emissions, and highly toxic. That’s where Quadrise Fuels and its Multiphase Superfine Atomised Residue (MSAR) technology comes in. It’s a way to combine HFO residue with water and produce a non-toxic alternative fuel with reduced carbon dioxide and nitrogen oxide emissions.

That sounds good to me, and the industry seems to like it too. This bioMSAR product, as its called, dominated the company’s interim results released in March. So, we have an effective technology, producing a lower-emissions fuel that could be in heavy demand in the coming years. The QFI share price gains since the formal launch in December do not surprise me.

What’s the downside?

But it can’t all be roses, can it? Well no, as the financial situation does look risky to me. Many a promising growth company with an exciting new product has tempted me over the years. But the need to keep seeking new finance has diluted out the early investors and left them with little or nothing. 

Quadrise Fuels is not profitable yet, reporting a £2.3m loss for the six months to December 2020. And that has to put a drag on the QFI share price. There was £1.1m in cash at 31 December. And Quadrise raised £7m from a placing in March. There should be enough to keep the company going until July 2022, but is that long enough to turn to profit? I think it’s very likely that further cash will be needed before we see any profits. Still, Quadrise does have a proven product, which is better than many growth companies at this stage in their development.

QFI share price history

I keep coming back to the QFI share price of just 5p. Now, the absolute level really doesn’t matter. The company would be exactly the same with one hundredth of the number of shares priced at 500p. But there’s one rule of thumb I always remember. Penny shares almost never start out that way — they usually start a lot higher and then crash.

That’s exactly the story at Quadrise Fuels. Back in 2013, investors valued the shares at more than 50p. We’re looking at a 90% fall in a little over seven years. Still, past performance is not a guide to future performance, and that works both ways. Just because the QFI share price has crashed in the past, that doesn’t mean it won’t keep on rising over the next few years. There are plenty of risks here, and I rarely buy unprofitable growth stocks or penny shares. But this one does tempt me.

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The rising Quadrise Fuels (QFI) share price

Quadrise operates within the oil industry but offers a relatively unique product. Using its proprietary Multiphase Superfine Atomised Residue (MSAR) technology, the company produces a synthetic heavy fuel oil (HFO).

Why’s this so exciting? HFO first became popular in the 1960s and is used predominantly to power large cargo ships. Today, approximately 60% of all ocean-bound vessels use it as a fuel source due to its low cost-to-energy ratio. The problem is HFO produces significant greenhouse gas emissions. And it’s also highly toxic when mixed with water or exposed to sunlight.

With the world shifting towards carbon neutrality, maritime regulators are trying to reduce the reliance on the material. And that’s where Quadrise steps in.

It combines HFO residue with water using its MSAR technology to create a non-toxic alternative fuel for cargo ships that is just as effective. What’s more, the substance is significantly cheaper, and it weighs less, thus reducing storage and handling costs. But, most importantly, carbon dioxide and the more harmful nitrogen oxide emissions are reduced by up to 30%.

Quadrise’s alternative fuel came onto the market in December last year. And in February, after some initial testing, the material was proven as a viable and more efficient fuel source for diesel cargo-ship engines. So I’m not surprised the QFI share price has been surging.

The risks ahead

Despite making tremendous progress, the company still has a long trip ahead. Quadrise does have some minor sources of income from its various projects worldwide. However, these aren’t currently sufficient to sustain the business, especially since Covid-19 has proven to be such a disruptive force.

As a result, the firm is currently unprofitable and is thus dependent on external financing to keep the lights on. In fact, it recently completed a share placement and open offer that successfully raised around £7m. This should be sufficient to see it through until July 2022. But I think it’s likely it’ll need to raise additional capital again in the future.

Naturally, an unprofitable, semi-pre-revenue business adds a considerable level of risk for investors. But supposing it can successfully penetrate the market and achieve its goals, I believe the QFI share price could continue to surge even higher.

The bottom line

Quadrise’s technology sounds incredibly promising to me. And given the rapidly climbing QFI share price, investors seem to agree. Having said that, there are still quite a few unknowns which makes me believe it might be too early to invest in at this stage. For now, I’m waiting to see how it progresses with its projects throughout 2021.

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QFI solves an environmental problem

Quadrise aims to solve the problem of significant oversupply of heavy fuel in the market. Producers and refiners make too much heavy oil, while demand is falling due to tighter maritime regulations. It’s also uneconomic to produce and it’s polluting. Nevertheless, there is a large market that still wants the fuel. Quadrise uses water and additives to create a fuel oil that is cleaner and cheaper to use.

Its new renewable fuel bioMSAR offers 20% to 30% reductions in CO2 emissions. This is an alternative to using Liquefied natural gas (LNG), but with less risk and lower cost.

Covid-19 slows the penny stock’s progress

The company has a few projects ongoing. It’s working with mining and chemical clients in Morocco where an industrial-scale trial is progressing to produce a fuel oil replacement. QFI will be paid £100k for the industrial trial and phase 2 study under existing agreements with the client. 

In Utah, it’s testing at the Petroteq Oil Sands Plant, for which it will be paid £150k. On successful completion, this will lead to the development of commercial production facilities capable of treating 10,000 barrels of oil per day. The QFI share price is rising today in response to news that this plant has restarted after a shutdown to allow for certain additional enhancements.

Quadrise also has projects in Ecuador and Saudi Arabia. Covid-19 has really thrown a spanner in the works when it comes to visiting and operating in these locations. But it’s hopeful the worst is now behind them.

Quadrise financials

For the six months ended 31 December 2020, the firm had £1.1m in cash reserves, down from £3.8m the year before. It raised an additional £7m in March via a share placing. This gives it the funds to progress with its projects until July 2022.

Its losses for this period amount to £2.3m, which was the same as 2019. Its assets were valued at £4.9m, down from £7.8 the year before.

There’s no doubt this is a good time for companies to be involved in renewables. Anything that helps the planet and reduces costs to industry is welcome. The key for investors is whether the company can logistically achieve what it hopes to, with the cash it’s already raised.

The Quadrise share price is up by 240% in a year. Unfortunately, penny stocks are notoriously volatile and very often must raise funds time and again. This makes it a risky investment. It’s not something I’m looking to invest in today, as I prefer to stick to the FTSE 350 stocks for my Stocks and Shares ISA. Nevertheless, I do see the potential and will keep an eye on its future progress.

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This was primarily caused by strength in Marshalls’ Domestic segment, where sales rose by 12%. This division represents around a third of its sales and even though order books fell to 11.7 weeks from 12.4 weeks in April, the outlook for the segment remains upbeat. Similarly, Marshalls’ larger segment, Public Sector and Commercial, also performed well and recorded a rise in sales of 2% in May and June.

Looking ahead, the uncertainty facing the UK economy could hurt Marshalls’ outlook. However, it trades on a price-to-earnings growth (PEG) ratio of just 0.7 and so there appears to be a wide margin of safety on offer. Plus, its strategy of reducing costs and improving operational efficiency should aid its financial performance even if sales disappoint, which makes now a good time to buy it for the long term.

Promising but pricey

Also reporting today was IMImobile (LSE: IMO). The provider of cloud software and solutions recorded a rise in sales of 26% in its most recent financial year, with organic growth contributing close to half of that figure. This resulted in adjusted pre-tax profit rising by 21%, with IMImobile’s European and American operations performing well and recording an increase in gross profit of 21%.

IMImobile’s future growth potential remains upbeat. It has a number of stable client relationships, a pipeline of new deployments and a high mix of recurring revenues that provide it with a good visibility of future performance. Its bottom line is expected to rise by 8% next year and while this is an impressive rate of growth, IMImobile’s PEG ratio of 1.7 indicates that it’s rather fully valued. As such, it may be prudent to await a keener share price or improved forecasts before buying a slice of it.

Profits ahead

Meanwhile, Quadrise Fuels (LSE: QFI) has fallen by 8% today after the release of an end-of-year update. The manufacturer and supplier of oil-in-water emulsion fuels reports that excellent progress has been made with the marine project since its half-year results. However, delays have been experienced regarding Quadrise’s pilot programme in Saudi Arabia, as well as on the technical evaluation work it’s undertaking for a number of clients.

In terms of Quadrise’s outlook, it’s expected to move from loss to profit in the next financial year and this has the potential to significantly improve investor sentiment in the stock. This would be highly welcome after Quadrise’s share price fall of 25% in the last six months. However, with investor sentiment being relatively weak and there being a number of highly profitable stocks trading on wide margins of safety, there may be better opportunities for investors to profit elsewhere.

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