Ballard Power (BLDP), FuelCell Energy (FCEL) and Plug Power (PLUG) are a trio of energy stocks that have had more twists and turns than a daytime soap opera. And the recent performance in BLDP, FCEL and PLUG stock has led me to the following conclusion:
The investing world is a few fries short of a Happy Meal.
I don’t know how else to explain the outperformance of these stocks, whose companies focus on fuel-cell technology. Ballard, Fuel Cell and Plug Power aren’t profitable and haven’t been so for years, and Wall Street analysts see red ink at these companies to continue for a while. And while there have been some signs that these companies are turning the corner, it doesn’t appear as though they will make money on a consistent basis for a while.
And yet … BLDP has surged more than 235% since the start of the year. FCEL is up more than 132%. And PLUG stock has skyrocketed nearly 300%.
Watch Out for BLDP, FCEL and PLUG Stock
Unfortunately, investors have gotten badly burned by this sector before. Shares of these companies skyrocketed along with other clean-energy names during the dot-com bubble, only to come crashing to earth. For example, even after PLUG stock’s monster 2014, shares still are off 99.7% from their 2000 reverse-split-adjusted price of nearly $1,500.
Granted, times have changed. Fuel cell technology has gotten better and more economical thanks to cheap, abundant supplies of natural gas, which they need to convert hydrogen and oxygen into electricity.
The technology, though, still isn’t economically viable.
As Quartz noted last year, fuel cell-generated electricity costs between 14 cents to 15 cents per kilowatt-hour, more than double the 6 cents to 9 cents per kWh that natural gas-created power costs. Coal-generated electricity costs 7 to 15 cents.
Like other types of alternative energy, fuel cell providers have stayed afloat courtesy of taxpayers. That’s because of their green benefits — fuel cells have a significant advantage over other types of conventional electric generation because they produce no pollution.
Click to Enlarge So when evaluating these stocks, people have thrown away their calculators and are relying on their gut, which has created some interesting charts.
These stocks have experienced some recent blowback, though for odd reasons. PLUG stock plummeted more than 40% Tuesday (and FCEL and BLDP also took double-digit hits) after a Wall Street analyst estimated Plug Power’s fair value at 50 cents. That’s pretty harsh considering that shares traded above $11 recently, but probably closer to the truth than current prices.
But what’s most bizarre about it is that the Citron Research analyst who doled out the report referred to Plug Power as a “casino stock.”
Which it is not.