That means that if I invested today and the price got back to its 12-month high, I could nearly quadruple my money. But how likely is that in reality?

Valuation woes

To understand what might happen next, first it helps to know why the share price has fallen so steeply.

Partly I think it is because the business performance seems to have gone backwards not forwards in the past year. At the interim results stage, for example, Ceres reported revenue, gross profit and a gross margin all sharply down from the same period last year. The post-tax loss jumped from £6.5m in the same period last year to £23.3m this time around. None of those figures look at all attractive to me as an investor.

On top of that, Ceres looked highly valued a year ago. Even now, after it has fallen 73%, the market capitalisation still comes in at over £650m. That strikes me as a lot for a loss-making company with no track record of profitability.

Long-term potential

Despite the recent weak financial performance, however, I do see some positive aspects to the long-term outlook.

It expects to ink joint venture agreements in China in coming months, which could provide a substantial revenue boost thanks to licence fees. Elsewhere, Doosan is planning to start manufacturing solid cell batteries in South Korea using Ceres technology.

Its tech has attracted serious attention from sophisticated companies like Doosan and Bosch, which suggests that it may be able to benefit from the projected long-term growth of demand in the solid cell battery market.

Can the share price bounce back?

However, simply having attractive technology is not enough on its own to justify the sort of market capitalisation Ceres Power had a year ago, in my view. In fact I do not even see it as enough to justify the current share price.

Instead I think the long-term direction of the shares will largely depend on how well the company is able to commercialise its technology. To do that well, I think it needs sales growth, a more diversified customer base than it has right now and a clear path to profitability.

If it does those things well enough, the Ceres share price might yet return to its former level – though I do not expect that to happen any time soon. If it confirms it has finalised the Chinese joint ventures, at least, that could provide a boost of confidence for investors that might lift the shares.

For now though, I continue to avoid adding Ceres Power to my portfolio. Its consistent lack of profitability and lack of a proven long-term business model continue to concern me. I would want more hard evidence of financial success at the company before considering adding it to my portfolio.

Renewable energy technology

As an introduction, Ceres is a leading developer of fuel cell technology. These fuel cells help the production of clean, low-cost energy. It currently has one flagship product, known as Ceres SteelCell.

So what’s happening with Ceres shares currently? Well, as I write, they’re trading for 389p. At this time last year, the stock was trading for 998p. This is a 61% decline over a 12-month period.

The investment case

Let’s take a look at some bull and bear aspects of Ceres shares to help me make a decision on my position.

First of all, Ceres as a growth stock has lots of future potential ahead, in my opinion. There is lots of policy support from governments to find alternative, clean energy solutions. As well as policy support, there is a lot of money being thrown at this from the public and private sector. An example of this is Ceres’ partnerships to date. As a smaller firm, it may not have the financing and infrastructure in place yet to progress its product line. These partnerships will enable that, and could eventually translate into performance growth, and returns for shareholders.

It is worth noting that Ceres will make money from licensing fees from said partnerships. To date, it has some lucrative partnerships, including one with energy powerhouse Shell, another with Chinese firm Weichai, and South Korean firm Doosan Group.

Investor sentiment towards Ceres could certainly boost shares too as the rise of ethical investing (ESG) continues. Millennials for example are looking for businesses to invest in that are ethical and Ceres ticks this box.

Away from the positives, it is worth noting that despite Ceres’ share price fall, the shares do look expensive. I find this is common in a growth stock as the potential has not been realised yet, but there is some excitement around future potential. In addition to this, Ceres is yet to turn a profit. I do believe this could change imminently as some of its partnerships are set to yield licence fees in the coming fiscal year. I will keep a keen eye on future trading updates.

A growth stock I will continue to monitor

Taking everything into account, I’m going to keep Ceres Power shares on my watch list for now. Based on my research and due diligence, there is lots of potential ahead, and the market excitement and partnerships signed to date demonstrate this. For me personally, I want to see more meat on the bones from a financial and trading updates point of view, and for the business to become profitable for me to be able to truly understand how it could boost my holdings.

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.

So, could this be the right moment for me to add the fuel cell maker to my portfolio?

What’s behind the fall?

Over the past year, a lot of tech shares have seen their share prices fall, so Ceres is far from alone in that regard. Investors have been reassessing some of the valuations that had previously been attached to tech shares and considering how justifiable they are.

On top of that, Ceres’ business performance lately has not exactly been spectacular. Revenue and other operating income for the first half is expected to come in at £10m, a 42% decline on the same period last year. The company looks set to remain loss-making. Last year, post-tax losses ballooned to £21m.

For now, the company remains flush with liquidity, ending the first half with £221m in cash and cash equivalents. The fall in revenues is also not as bad as it may seem, since it largely reflects the timing of contracts rather than a fundamental deterioration in the business. Still, in itself that reflects how reliant the company currently is on a very limited customer base.

Set against that, can Ceres Power shares justify their combined worth of over a billion pounds?

Valuing Ceres Power shares

I do not think they can. I tend to value shares using either a price-to-earnings ratio or discounted cash flow model.

For now, Ceres’ earnings are non-existent as it remains loss-making.

What about cash flow? In short, I think it is too early to tell. The future demand for the sort of fuel cells Ceres makes could be large, but then again they might be overtaken by another technology in due course. If they do become popular, Ceres’ early work on them could help it scale up fast. Or it may be that a late entrant to the market spends heavily and outperforms the initial players. On top of that, the economics of Ceres’ business model once it is scaled up remain hard to know.

With so many variables, I think it is impossible to make a meaningful estimate of Ceres’ likely future cash flows.

Why I’m waiting

Down the line, then, it may be that Ceres Power turns into a large and successful business. I think it has promising technology in an exciting field likely to see strong growth in coming years.

Right now, though, it is hard to know how the business might do in future. A market capitalisation in excess of a billion pounds seems expensive to me. Even after Ceres Power shares halved in the past year, I still have no plan to buy them for my portfolio. But I will keep an eye on how the business performance shapes up over the next several years.

The UK, Europe, and the US have made renewable energy part of their ‘build-back-better’ plans for post-Covid economic recovery. Russia’s invasion of Ukraine has led many countries to rethink their future energy security. And, more broadly, hydrogen is seen as a key element in the global drive to reduce emissions from energy consumption and achieve net zero by 2050. Some analysts estimate the hydrogen economy could be worth more than $10 trillion by that time.

What are hydrogen stocks?

Hydrogen stocks are companies in the renewable energy industry that are primarily focused on the development, manufacture, or sale of hydrogen fuel technology, equipment, or services.

Given the potential size of the market, it’s not surprising to see oil giants, like BP, major utilities, like SSE, and chemical companies, like Johnson Matthey, in the early stages of incorporating hydrogen energy into their business plans. 

However, there are a number of firms focused exclusively, or almost exclusively, on the hydrogen economy. Some have been established for many years.

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Top hydrogen shares in the UK

Here are the UK’s biggest pure-play hydrogen stocks:

ITM Power

Founded in 2001, ITM Power became the first hydrogen company on the London Stock Exchange when it listed in 2004.

It has developed and manufactures proton exchange membrane electrolysers, which create green hydrogen using only renewable electricity and water. It has a partnership with Linde, the world’s largest industrial gas company, which also owns 16% of ITM’s shares. Other partners include oil giant Shell and leading European natural gas transport and storage operator Snam.

City analysts are forecasting a step-change in ITM’s revenue to over £50m in its 2023 financial year.

Key metrics:

• Market cap: £1,305m (as of 13 June 2022)
• Average daily volume: 3.3m
• HQ: Sheffield, UK
• Cash/debt: £364m/no borrowings (as of 30 April 2022)

Ceres Power Holdings

Also founded in 2001, Ceres Power joined the stock market a few months after ITM in 2004. It’s the UK’s other hydrogen stock with a market capitalisation in the £1bn+ category.

The company has developed solid oxide fuel cell technology for hydrogen production. Its strategy is to license its technology to global original equipment manufacturers and generate royalties as those manufacturers achieve full-scale commercialisation. Its partners include China’s Weichai Power and Germany’s Bosch. The former owns 20% of Ceres’s shares and the latter 18%.

Analysts have pencilled-in revenue of around £40m for Ceres in 2023.

Key metrics:

• Market cap: £1,010m (as of 13 June 2022)
• Average daily volume: 1.0m
• HQ: Horsham, UK
• Cash/debt: £245m/no borrowings (as of 31 December 2021)

AFC Energy

Founded in 2006 and listed on the stock market in 2007, AFC Energy is one of a number of UK hydrogen stocks currently capitalised in the £100m-£200m bracket.

The company has developed alkaline fuel cell systems that use hydrogen to produce clean energy. It has inked a number of strategic collaborations including with Swedish/Swiss technology multinational ABB, a leading provider of electric vehicle charge points and electrification and digitalisation technologies. ABB also subscribed for £3.25m AFC shares in a subsequent fundraising.

City analysts are forecasting AFC’s revenue to break through £10m for the first time in 2023.

Key metrics:

• Market cap: £169m (as of 13 June 2022)
• Average daily volume: 3.7m
• HQ: Cranleigh, UK
• Cash/debt: £55m/no borrowings (as of 31 October 2021)

Proton Motor Power Systems

Proton Motor Power Systems was formed and listed on the stock market in 2006 to fund the commercial development of research and pilot fuel cell projects conducted in Germany over the previous decade.

The company has developed a hydrogen fuel cell module integrated with an energy storage system to create an electric fuel cell hybrid system with a zero-carbon footprint. Historical revenue is running below £3m and there are currently no financial forecasts on the company available.

Key metrics:

• Market cap: £147m (as of 13 June 2022)
• Average daily volume: 0.4m
• HQ: Newcastle-upon-Tyne, UK
• Cash/debt: £2m/£84m (as of 31 December 2021)

Hydrogenone Capital Growth

In July 2021, Hydrogenone Capital Growth became the first hydrogen investment company listed on the London stock market. By the end of the year, it had deployed almost half the £105m funds it had raised at its flotation.

Around 9% of the capital (£10m) was invested in 19 international hydrogen stocks. It expects these companies to be the eventual leaders in the listed hydrogen market. Its UK picks were ITM Power, Ceres Power, and AFC Energy.

However, Hydrogenone’s performance will rest more on its larger investments in a smaller number of unlisted firms in the sector. For example, it’s invested £10m in Bramble Energy, which has pioneered a printed circuit board fuel cell solution.

Key metrics:

• Market cap: £122m (as of 13 June 2022)
• Average daily volume: 0.2m
• HQ: London, UK
• Cash/debt: £34m/no borrowings (as of 31 December 2021)

Clean Power Hydrogen

As mentioned, ITM is London’s largest and first-listed hydrogen stock, and a leader in proton exchange membrane electrolysers. By contrast, newly listed (February 2022) Clean Power Hydrogen is aiming to ramp-up commercialisation of membrane-free electrolyser technology. It says this technology, in combination with cryogenic gas separation, delivers very high purity hydrogen and medical-grade oxygen.

One analyst suggests the company could see revenue of close to £30m by 2023.

Key metrics:

• Market cap: £110m (as of 13 June 2022)
• Average daily volume: 0.1m
• HQ: Doncaster, UK
• Cash/debt: £0.5m/£0.4m (as of 31 December 2021)

Investing in US hydrogen shares

Despite a fair range of hydrogen stocks on the UK market, there are some larger enterprises in this sector on foreign exchanges. Here are the leading US players in order of market capitalisation:

• Plug Power
• Bloom Energy
• Ballard Power Systems
• FuelCell Energy

Are hydrogen stocks right for you?

There’s little doubt the hydrogen economy will increase to many multiples of its current size in the coming decades. With such a strong structural backdrop for growth, investing in hydrogen shares could be highly rewarding.

Having said that, stocks in the sector also come with higher risk. The businesses are at an earlier stage of development than some in other areas of the renewable energy market. All of the six UK hydrogen companies and four US names featured are currently loss-making businesses. In addition, they’re not forecast to generate positive cash flows any time soon, far less pay dividends. As such, these won’t be the right stocks if your primary focus is on income.

As the hydrogen market grows, and rival technologies are put to the test when the full competitive dynamics of the industry emerge, there are likely to be winners and losers. If you’re prepared to accept above-average risk in exchange for potential high capital returns from the long-term winners, investing in green hydrogen stocks might be right for you.

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But today I am looking a growth stocks. Specifically, ones that I think that will benefit from a range of global trends.

Hargreaves Lansdown

Perhaps it’s not as exciting as biotechs and EVs, but I see Hargreaves Lansdown (LSE:HL) being a big winner as investors increasingly take control of their own investments. According to Lloyds, around one in 10 Britons started investing during the pandemic.

This meant that 2020/21 was a bumper year for the Bristol-based financial services firm, which is essentially a supermarket platform for stocks and funds. In its most recent report, Hargreaves highlighted that it was continuing to grow its client base, which now numbers more than 1.7m.

There might be a short-term slowdown as the cost-of-living crisis bites, but I see the long-term trends as being very positive for Hargreaves. It also pays a healthy 4% dividend right now, which is not what I’d expect from a conventional growth stock.

Sociedad Química y Minera de Chile

Sociedad Química y Minera de Chile (NYSE:SQM) is one of the world’s biggest lithium mining stocks. It has been going from strength to strength over the past 18 months, but particularly this year as lithium prices spiked.

The Chile-based company has a 25% share of the global lithium market with 20+ years of reserves. It’s also fairly low cost in comparison to peers. SQM is looking to increase lithium carbonate equivalent capacity by 30% annually until 2025. This should cement its place as a global leader.

Lithium is widely used in the production of batteries used in EVs and other technologies. It’s clearly much in demand as we move away from fossil fuels.

But I’m not buying just yet. This year, lithium prices have gone from $10,000 per tonne to nearly $68,000 today, but it’s predicted to fall to $16,000 next year amid recession fears. So, while I’m bullish on the long-term prospects, I think there’ll be better opportunities to buy in the coming months.

Ceres Power

Ceres Power (LSE:CWR) is a world leader in fuel cells and hydrogen power. And 2022 could be a big year for Ceres. It has lucrative partnerships with Bosch and Doosan Fuel Cell, with the latter looking to soft-launch its first product this year.

Ceres is debt-free, and has £245m in cash. It’s got a cash runway of about 7.6 years, having only burned £32m over the past 12 months. It also doesn’t manufacture its own products, which removes some of the need for huge sums of capital expense.

There’s clearly no guarantee that Ceres’s tech will be the next big winner, but I’m confident it will be part of the future of energy generation and transport. With the share price down 32% over the past 12 months, I’d buy now.

But now there’s the exchange rate to think about. A year ago, £1 got me around $1.40. But the pound has got weaker and the dollar stronger. Today, £1 gets me $1.20, and some analysts think the pound may drop over the next couple of weeks to $1.15.

So, why is the exchange rate important? In the long run, I foresee the pound being a stronger position than it is now. If I invested in a US stock now, and the pound appreciated 10% over the next three years, then it would wipe 10% off the value of my investment.

As a result, I’m looking at UK-listed growth stocks instead of the NASDAQ. So, here are two of my top UK growth stocks I’d buy now.

Kropz

Kropz (LSE:KRPZ) is an Africa-focused phosphate rock mining company. Rock phosphate is the raw material that’s used to produce phosphate fertilisers. The company is looking to play a major role in the food industry in the decades to come. 

The company’s main asset is in Elandsfontein, South Africa’s Western Cape province. Kropz hopes to produce rock phosphate from its Elandsfontein mine later this year. However, it has already been forced to delayed its first bulk sale, which is now forecast later this year.

Around 85% rock phosphate is used in fertiliser production. And it might not be a bad time to be entering the market as fertiliser prices have gone sky-high on the back of higher fuel prices.

Kropz also says that the Hinda rock phosphate asset in Republic of Congo could be “one of the world’s largest undeveloped sedimentary-hosted phosphate reserves“.

I’m a little concerned about when first production will be. And it’s worth noting that there’s a sizeable spread between the buying and selling price. Nevertheless, I see this stock as a good long-term investment.

Ceres Power

Ceres Power (LSE:CWR) is a fuel cell and electrochemical technology developer. There is clearly a lot of potential for any player in this area.

The company has been moving fairly slowly, but there are signs this stock might be about to take off. The AIM-traded firm recently announced that the completion of a China-focused joint venture with Bosch and Weichai Power was now expected to take place in the second half of the year.

Fuel cells won’t only be used in cars, but everything from powering homes to supporting massive cloud data centres. In partnership with Weichai, Ceres has developed a unique electric vehicle (EV) range extender system, using its SteelCell product, delivering high levels of efficiency and with very low emissions.

In June, Ceres Power also announced the signing of an agreement with Shell to deliver a megawatt-scale solid oxide electrolyser demonstrator in 2023. It will be used at Shell’s research and development technology centre in Bangalore where the hydrogen will be used in industrial processes on site. Such products could have huge potential in remote facilities or construction sites, such as Saudi’s NEOM project.

Despite this, growth and tech stocks, on the whole, have performed poorly throughout 2022. And for me, this represents a buying opportunity.

So, here are two growth stocks I’m looking at buying before the market recovers.

Twilio

Twilio (NYSE:TWLO) shares have extended losses over the past five days. The stock is down 14% over the past week and 79% over the past year. However, it still has a market value of $14bn. That just reinforces quite how big this stock got in 2021.

The firm provides programmable communication tools for making and receiving phone calls, as well as sending and receiving text messages and app operations. It allows your smartphone apps to seamlessly connect with one another, and given the growth in app usage over the past few years, there is clearly a huge amount of potential here.

It’s recent performance has not been as bad as the falling share price suggests. In fact, in its last reported quarter, Twilio’s organic revenue rose 35%, above expectations. However, Twilio is still a loss-making company. Net losses for the last quarter were $221m.

So, it might be a while be Twilio becomes a truly profitable firm.

However, Twilio is on an impressive growth curve. Revenues have increased from $49.9m in 2014, to $2.8bn in 2021. Revenue from 2020 to 2021 increased by $1.1bn.

Broker ratings are hugely split on Twilio. Scotiabank issued an “outperform” rating and a $215 price target for the company in June, implying a $140 upside on today’s price. But, last week, Jefferies lowered their price target on the stock from $130 to $110.

Personally, I see this as an area of the market where there is considerable potential, and Twilio’s growth curve reflects that. For me, Twilio is a buy at $78.

Ceres Power

Ceres Power (LSE:CWR) is a British firm developing fuel cell technology. This is an area of immense potential as fuel cells could be used to power everything from cars to factories and even homes.

2022 could be a big year for Ceres. It has lucrative partnerships with Bosch and Doosan Fuel Cell, and the latter is working on a soft launch its 10kW SOFC product this year.

The fuel cell and electrochemical technology innovator also recently teamed up with Shell to deliver a megawatt-scale solid oxide electrolyser demonstrator. The product will be used to power R&D facilities in India. 

Doosan Fuel Cell is also looking to scale up production of the 10kW SOFC product with the opening of a 79,200 sq m plant in 2024.

Another positive is that Ceres does not have any debt. In fact, it had £245m in cash and has only burned £32m over the trailing 12 months, meaning it has a cash runway of about 7.6 years.

The Ceres share price has nearly halved over the past year. But the company now trades with a price-to-sales ratio of around 33.

It’s certainly going to be a competitive market, and there’s no guarantee that this technology will take off. But I’m willing to take that risk on Ceres. I’d add this stock to my portfolio today.

Conditions aren’t exactly great for growth stocks right now either. Higher interest rates tend to push the cost of growth upwards, unless the company in question has sufficient cash reserves to fund growth — Moderna being a good example.

For me, now is a good time to buy. So here are three high-potential growth stocks I’m looking at for my portfolio.

Ceres Power

Ceres Power (LSE:CWR) is a UK-based leader in fuel cell technology, enabling the production of clean and low-cost energy. Its main product, SteelCell, uses a perforated sheet of steel with a ceramic layer that converts fuel directly into electrical power.

There is clearly huge potential here. Fuel cells could be used in everything from cars, to powering homes in more remote areas, and even supporting data centre operations.

Ceres is also expanding its operations rapidly. It also has lucrative partnerships with Bosch and Doosan Fuel Cell, with the latter expected to soft launch its 10kW SOFC product this year. The South Korea firm is scaling up production and will open a 79,200 sq m plant in 2024. 

Ceres has also recently announced a partnership with Shell. It will provide the oil producer with its SOEC system to power R&D facilities in India.

With the share price falling this year, Ceres now trades with a price-to-sales (P/S) ratio of 34. It’s expensive, but that reflects the huge potential. I’d gladly add this stock to my portfolio.

NIO

I’m already a NIO (NYSE:NIO) shareholder, but I’m looking to buy more stock. However, although I think we’re going to see downward pressure on China-based stocks in the coming weeks, I believe the brand has great long-term potential.

NIO is on a Tesla-esque growth curve and its got a great USP. The Chinese electric vehicle maker uses battery-swapping technology to allow drivers to quickly return to full charge while on the road. The cars are also tech-packed and include gadgets like Nomi — an Alexa-like dashboard-mounted device that can open the windows for you, or even take a selfie.

The Chinese firm also looks cheap compared to its peers. It has a P/S ratio of 5.5, which is half that of Tesla and a fraction of US-based manufacturers.

I fear general economic woes in China may weigh on the share price in the coming weeks. But, again, I see the share price soaring in the long-run.

Twilio

US-based Twilio (NYSE:TWLO) provides programmable communication solutions for the telecommunications industry. It allows your smartphone apps to seamlessly connect with one another. 

Like other growth stocks, its been a tough year for Twilio. But there is some positive news behind the share price. In the last quarter, organic revenue rose 35%, above expectations, while revenue (including takeovers) rose 48%.

Scotiabank initiated coverage of Twilio with a bullish ‘outperform’ rating in June. The broker’s price target of $215 implies 160% upside from $85.

I think the firm is still some distance from turning a profit, hence the $221m loss in the last quarter. However, I’d be willing to add this stock to my portfolio due to its long-term potential.

Twilio stock is down 76% over 12 months.

Accordingly, investing in a S&S ISA forms an essential part of my early retirement plan. Here’s how I’d go about achieving that goal.

Early retirement planning

Harnessing the power of compound interest is crucial in building a healthy retirement pot. The tax advantages associated with pension contributions make them an attractive starting point. However, given age restrictions on withdrawals, pensions are only part of the solution for early retirement.

This is where the Stocks and Shares ISA comes into play. I’d split capital allocations carefully between my pension and ISA, reinvesting any dividends in the process. Eventually, I’d use the latter as a ‘bridge’ from my early retirement date to the date I’m eligible to make pension withdrawals.

With a plan in place, let’s turn to how I’d invest in my ISA.

Growth stocks

First, I’d identify growth stocks with potential for capital value increases.

Ceres Power (LSE: CWR) is one FTSE 250 growth stock on my watchlist. The early-stage hydrogen technology company stands to benefit from the green industrial revolution. Down 45% this year, the Ceres Power share price looks cheap to me at 531p.

The company’s latest financial results show promise. Cash and investments rose to £250m from £110m the year before following a successful fundraising. Revenue grew by 44% to £31.7m. Furthermore, Ceres Power boosted its employee headcount to 489 — a 50% increase.

Ceres Power recently partnered with Bosch and Weichai Power to target China’s fuel cells market. Last month, speculation that Bosch may launch a takeover bid for Ceres Power lifted its shares by 10%, although it has since relinquished these gains.

Speculative trading behaviour carries risks. Should any prospective acquisition fall through, this could spark heavy selling in Ceres Power shares.

Dividend stocks

Next, I’d focus on dividend stocks to generate passive income streams.

A good example is FTSE 100 housebuilder Barratt Developments (LSE: BDEV). It offers a 6.7% dividend yield. Down 34% this year and with a reasonable price-to-earnings ratio below eight, I see value in Barratt Developments shares.

In its latest trading update, the business confirmed it’s on track to deliver between 18,000 to 18,250 home completions — in line with the Board’s previous expectations. Additionally, balance sheet strength has been maintained with projected year-end net cash over £1bn.

Rising interest rates could depress UK house prices. This would be a headwind for the Barratt Developments share price. However, a shortage in new homes being built means that the long-run outlook remains positive for this dividend stock for me.

Aiming for ISA millionaire status

The elite Stocks and Shares ISA millionaires club is 2,000 strong. Assuming a 7% annual compound growth rate, I could hit the magic £1m target in 22 years by consistently using up my annual allowance — more than enough for a prosperous retirement.

Granted, that calculation rests on big assumptions and contributing £20,000 per year would be no mean feat. Nonetheless, it’s a worthwhile ambition and not an impossible one to realise by diligently applying Foolish investing principles over decades!

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.