Move Over TSLA & SCTY – Plug Power Is About to Turn a Profit

by Burke Speaker | December 9, 2013 10:03 am

Alternative energy continues to gain national buzz and Tesla (TSLA[1]) and other solar stocks are burning hot.

[2]But it’s a lesser-known alternative energy stock — Plug Power (PLUG[3]) — that stole the stock spotlight last week, booming 175% in the past five days and bringing its year to date climb up to over 300%.

The fuel cell maker has not seen a net income since 1999, and announced that come 2014 it expects to turn a profit.

According to a statement (via Bloomberg[4]), Plug “received orders for $17.8 million of its fuel cells for forklifts since Oct. 8. The company needs to ship 3,000 units next year for earnings before interest, taxes, depreciation and amortization to reach break even.”

The company predicts fourth quarter orders may reach upwards of $40 million and the recurring revenue from service contracts and cost cuts are expected to be the boost it needs to see profitability.

As PLUG CEO Andy Marsh explained the company’s turnaround efforts in November: “We are like a phoenix rising. Ever since the Air Liquide investment we have been taking off.” (via SeekingAlpha[5])

Plug Power received the investment from Air Liquide when shares were trading near $0.12 in early May. Since then, the stock has returned nearly 700%. While the above chart may look daunting for prospective investors who want to gain exposure to Plug Power’s promising future, the chart below shouldn’t.

With news of PLUG stock jumping, so too did related company stock:  FuelCell Energy Inc (FCEL[6]) and Ballard Power Systems Inc. (BLDP[7]) each saw a strong rally on above-normal volumes.

Solar stocks such as SolarCity (SCTY[8]), First Solar (FSLR[9]), and Canadian Solar (CSIQ[10]) have all seen increases as alternative energy looms large in the national conscience.

Plug Power makes fuel cell modules that replace batteries for fork lifts. As several industry analysts have pointed out, these fuel cell modules have distinct advantages over batteries. Though they cost more, big-name companies such as Walmart (WMT[11]), Sysco (SYY[12]), and Coke (CCE[13]) have invested in Plug Power’s fuel cell fork lifts for their distribution centers/warehouses.

Adoption over the past decade, however, has been sluggish. In fact, the company was considering bankruptcy not even a year ago.

The company managed to raise money at very unfavorable terms to existing shareholders and at heavy dilution. The share count ballooned from around 38 million diluted shares a year ago to around 125 million today which is serious dilution. In May Plug Power picked up a strategic investment from its partner Air Liquide. This was the catalyst that started Plug Power on its upward trend.

In early Monday trading, PLUG stock was down 11%.

As of this morning, shares of PLUG stock are up more than 250% year-to-date.

Source URL: https://investorplace.com/2013/12/plug-power-plug-stock-tsla/

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