Fuel cell supply stocks: How to play volatility

By Chris Lau for Kapitall.

Volatility is rife for companies in the fuel cell sector. This implies investors with a low tolerance for risk should avoid fuel cell companies. For those willing to venture into this space, there are three companies to watch.

Ballard Power ( BLDP) won a deal with Azure Hydrogen that is worth $6 million. This will boost Ballard’s growth in the Chinese market. The firm will supply fuel cell stacks and fuel processors. The deal also lets Ballard monetize its intellectual property.

Bearishness in Ballard’s stock is high. The short float is 8.75%, and is one of the reasons for the volatility in its shares.

The release of Hyundai’s first hydrogen fuel cell powered SUV should boost awareness of hydrogen cell suppliers.

FuelCell Energy ( FCEL) is another play for investors in the fuel cell market. Shares peaked on March 10th, but are trying to make a comeback.

FuelCell won a deal to supply a 1.4 MW fuel cell power plant for the University of California.

Fundamentally, FuelCell still has many challenges. Its last quarter missed expectations as losses and expenses went up. Even though revenue fell overall by 10% thanks to weaker product sales, service and license revenue improved. Backlog also improved to $342.8 million, compared to $326.9 million from the previous quarter.

Plug Power ( PLUG)

Profitability eludes Plug Power at this time. Last quarter, the firm reported a loss. On the positive side of things, bookings doubled over the previous year to $80 million. Plug Power expects to ship over 650 GenDrive units in the current quarter. It also aims to generate revenue above $70 million this fiscal year. If Plug is profitable by the end of this year, short sellers (the stock has a short float of 22.66%) could get squeezed.

Bottom Line

Expect volatility to persist in shares of fuel cell suppliers. When the dust settles, Ballard Power is the company investors should watch most closely. The firm continues to execute on its plans, and has the fewest bears betting against the company.

 

Click on the interactive chart to view data over time. 

 

1. Ballard Power Systems Inc. ( BLDP, Earnings, Analysts, Financials): Engages in the design, development, manufacture, sale, and service of fuel cell products for motive and stationary power markets primarily in the United States, Canada, the United Kingdom, and Germany. Market cap at $545.9M, most recent closing price at $4.13.

 

2. FuelCell Energy Inc. ( FCEL, Earnings, Analysts, Financials): Engages in the development, manufacturing, and sale of high temperature fuel cells for clean electric power generation primarily in South Korea, the United States, Germany, Canada, and Japan. Market cap at $629.3M, most recent closing price at $2.42.

 

3. Plug Power Inc. ( PLUG, Earnings, Analysts, Financials): Provides alternative energy technology via the design, development, manufacture, and commercialization of fuel cell system for global industrial off-road markets. Market cap at $792.2M, most recent closing price at $4.74.

 

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