This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Should You Buy Into the Rise of the Fuel Cell Makers?

In the last year, the company's sale of telecom backup power rose 74% to $20.5 million, which was driven by high demand from Japan, Southeast Asia, South Africa and the Caribbean. In the current year, Ballard Power is eyeing deeper penetration, with a focus on growing in its new markets, such as Australia, Myanmar and the U.S.

The company also reported 24% growth in its higher margin engineering services division. The segment remains the biggest contributor to Ballard Power's revenue and income. The company is expecting 30% growth from this segment in the current year, which will be driven by its partnership with Volkswagen (VLKPY) as well as design and commissioning of fuel cell infrastructure for other customers.

Ballard Power's revenue from development stage markets rose 50% from 2012 to $13.2 million in 2013, due to the bus licensing agreement with China's Azure Hydrogen. This deal could continue to power the company's profit and margins in the coming quarters.

The unit's growth, coupled with higher licensing revenue, has driven Ballard Power's margin expansion. Another year of solid growth could result in further margin expansion. The business has forecast break-even EBITDA for 2014, which could be followed by positive cash flows.

Ballard Power's material handling sales are up just 5% this year, but they gained momentum in the last quarter of the fiscal year. This was due to higher orders from Ballard's partner Plug Power, the market leader in the fuel cells materials handling systems in North America. This unit could witness significant growth in 2014 with considerable increase in shipments. Moreover, the recent deal between Wal-Mart and Plug Power could also give a boost to Ballard's revenues.

In the long term, Ballard Power could once again go on to become a mid-cap stock but that requires significant growth of the commercial fuel cells market. However, some of the leading automakers -- such as Toyota (TM), which I have also discussed in my previous articleHyundai; and Honda (HMC) -- are gearing up to launch fuel cell cars in the coming years. Moreover, Tesla's new Gigafactory and its expansion plans in Europe could turn into big opportunities for the fuel cell makers. This sets up a positive tone for Ballard Power's long term future.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
BLDP $2.20 0.00%
FCEL $1.24 0.00%
PLUG $2.49 0.00%
AAPL $128.95 0.00%
FB $78.99 0.00%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs