Could these two growth stocks be the next big winners?

Growth stocks are only a small part of my portfolio. After all, many growth stocks fail, so it’s not always worth taking that risk. Instead, I carefully pick my top growth stocks, looking at their performance, valuation, and the trends on which their growth is reliant.

Today, I’m looking at two firms poised to benefit from the green revolution. Can these stocks be the next big winners?

Ceres Power

Ceres Power (LSE:CWR) is pretty expensive, according to a number of metrics. In fact, it has a price-to-sales (P/S) ratio of 33 and is yet to turn a profit.

But this rather expensive valuation is reflective of the considerable potential of this clean energy stock. The company is developing fuel cell technology, and this is an area of immense potential as fuel cells could be used to power everything from cars to factories and even homes.

Ceres’s value to date very much lies in the technology it develops. But that could be about to change. The firm expects the completion of joint venture contracts with Bosch and Weichai in China in the second half of the year. The associated licence fees would also be forthcoming in H2.

Ceres, which operates through a licensing model, also expects its venture with Doosan Fuel Cell to start bearing fruit in the near future. Doosan’s 10kW Solid Oxide Fuel Cell (SOFC) — advertised as the world’s most efficient — is expected to soft launch this year. The Korean firm is also planning to open a 79,200 sq m plant in 2024 to scale up production.

While I’m bullish on this technology, I have some concerns about uptake. After all, there is no guarantee this technology will take off in a big way.

Having said this, I’d still buy Ceres shares. Its technology is certainly receiving a lot of interest — its even collaborating with Shell — and its business model delivers impressive margins, currently standing at 66%.

NIO

NIO (NYSE:NIO) is a Chinese electric vehicle (EV) manufacturer. It has a P/S ratio of around six, making it considerably cheaper than its American peers — notably Lucid at 146.

It’s got an impressive range of EVs on sales, and that’s good for reach and growth. And it’s also launching in Europe, which will provide the firm with access to a higher wealth market for its range of premium vehicles.

There are several reasons why I’m bullish on NIO, including the sector-beating performance of its cars, its use of innovative technology, including voice activated windows, and its swappable battery technology. The latter allows drivers to turn up at a NIO station and swap the battery in a matter of minutes — much faster than conventional charging.

One thing that does concerns me is sanctions. Several manufacturers, including Stellantis, have shut production facilities in China due to concerns over sanctions and meddling relating to geopolitical issues between the West and Beijing. NIO is opening a battery station plant in Hungary, but I still have some concerns about Chinese-made car having access to Western markets should the geopolitical situation get worse.

Despite my concerns, I’m backing NIO to succeed. There’s a sizeable Chinese market, and NIO is expanding one area of production into Europe. I already own NIO shares but would buy more today.