All Mr. Market is talking about right now is the explosive moves happening in the alternative energy space. We at Insider Financial have covered this sector in-depth starting with Tesla in 2018, Ballard Power in 2016, Plug Power in 2017, and most recently NIO, Ideanomics, and Workhorse Group when the stock was $1.80 a share. One name in the sector, however, has yet to make the big move and that is FuelCell Stock.
FuelCell is a stock that we covered in September 2019 before it made its big run. That’s the key to trading stocks. Identify the momentum before it happens. After it’s too late and you end up holding the bag like a sucker, which is what happens to most investors in penny stocks.
Here’s a chart of FuelCell stock. We covered NASDAQ:FCEL when it was trading at just $.37 a share, 3 months before it’s run to $3! Now with all the other names making triple-digit moves, is FuelCell stock next?
About FuelCell Stock
First up, here’s a little background info for those of you that aren’t familiar with FuelCell stock. FuelCell Energy is a global leader in developing environmentally responsible distributed baseload power solutions through its proprietary fuel cell technology. The company develops turn-key distributed power generation solutions and operate and provide comprehensive services for the life of the power plant.
Its fuel cell solution is a clean, efficient alternative to traditional combustion-based power generation and is complementary to an energy mix consisting of intermittent sources of energy, such as solar and wind turbines. FuelCells provides solutions for various applications, including utility-scale distributed generation, on-site power generation, and combined heat and power, with the differentiating ability to do so utilizing multiple sources of fuel including natural gas, renewable biogas (i.e., landfill gas, anaerobic digester gas), propane and various blends of such fuels.
- Revenues of $18.9 million, an increase of 105%, compared to $9.2 million
- Loss from operations improved to $(8.1) million compared to $(17.6) million
- Net loss decreased to $(14.8) million compared to $(19.5) million
- Adjusted EBITDA of $(3.3) million compared to $(14.5) million
- Gross profit of $0.2 million (0.9% gross margin) compared to gross loss of $(3.6) million ((39.5)% gross margin)
- Operating expense of $8.3 million, a decrease of $5.7 million, or 41%
- Backlog of $1.34 billion, an increase of $80.8 million, or 6%
What really has investors excited about FuelCell stock is its hydrogen technology. Companies lie Nikola are betting on hydrogen fueling stations to keep its vehicles on the road whereas Tesla relies on batteries. While we aren’t going to get into a debate over which is the better technology, if hydrogen is your bet, then you need a position in FuelCell stock.
Its SureSource power plants are capable of producing multiple value streams, including the on-site production of high purity hydrogen along with ultra-clean electricity and usable heat. In a standard configuration, a fuel, such as clean natural gas or renewable biogas, is reformed inside the fuel cell into hydrogen, which then electrochemically reacts with air to generate power and heat. FuelCell’s SureSource Hydrogen fuel cell power plant is configured to produce additional hydrogen beyond what is needed for power production, generating a stream of hydrogen suitable for industrial or transportation applications.
Further exciting investors is the bet by Warren Buffett purchasing Dominion’s gas pipeline and storage business. FuelCell has the technology that provides a unique way to separate hydrogen from clean natural gas or renewable biogas in a process with relatively low energy consumption and without the need for pressurization. Hydrogen can also be compressed in the same process, using just minimal energy and avoiding the use of mechanical rotating equipment. The high efficiency of the EHS process and lack of moving parts results in low operating costs compared to current hydrogen separation technologies.
There is speculation that the purchase allows Buffett to use Dominion’s pipeline assets to transport hydrogen to Berkshire’s Flying J truck stops. What is Nikola betting on? Hydrogen truck stops that can fuel its vehicles. Like all good chess players, Buffett and Trevor Milton are thinking ahead. Alternative energy is the future and fossil fuels belong in the stone age.
Currently trading with a market cap of $547 million, FuelCell stock has lagged behind its peers in the current run-up. We believe this will correct itself as FuelCell stock looks set for a breakout to new highs. With the buzz surrounding hydrogen, we believe that breakout is coming sooner than later, especially with 14% of the float short.
Good luck to all (except the shorts)!
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Disclosure: We have no position in NASDAQ:FCEL or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article.