Plug Power (PLUG) stock is a day trader’s dream and a value-investor’s nightmare, but there’s no denying that PLUG has been good for truly stratospheric gains … if you can just hold on.
Click to Enlarge After a huge run early in 2014 that took Plug Power stock up to a year-to-date gain of more than 500%, the top blew off. PLUG spent the next three months giving up about two-thirds of that run. But now Plug Power stock is on the attack once again.
This is what volatility looks like.
They could put a Plug Power chart next to that word in the dictionary.
But there’s no denying the gains. Even after the meltdown, Plug Power stock was a huge year-to-date winner, with price returns in excess of 130%. And now that it’s in an uptrend again, PLUG has more than quadrupled on the year, with all kinds of technicals at its back.
Fundamentals aren’t hurting, either.
First Profit for Plug Power
Plug Power surged Thursday after quarterly revenue beat Wall Street’s estimates and the company turned its first net profit ever.
For the most recent quarter, Plug Power swung to net income of $3.8 million, or 2 cents per share, vs. a net loss of $9.3 million, or 14 cents per share, a year earlier. After excluding one-time gains (as analysts do), Plug Power posted an adjusted loss of 4 cents a share, in line with Wall Street’s estimates.
Revenue, meanwhile, more than doubled to $17.3 million, coming ahead of projected revenues of $16.7 million, according to analysts surveyed by Thomson Reuters.
Perhaps the upside on the top line shouldn’t have been such a surprise. Plug Power said it deployed its first hydrogen fuel cell unit at Walmart (WMT) in the quarter. The world’s largest retailer ordered Plug Power unites for seven of its sites, so that demand is just ramping up.
Other sources of demand — customers include Procter & Gamble (PG), Daimler (DDAIF) and BMW (BAMXY) among others — were higher than expected, too. Plug Power shipped 687 fuel-cell units in the second quarter, better than the 650 it had targeted.
Plug Power Lifts FCEL, BLDP
Rival fuel-cell plays FuelCell Energy (FCEL) and Ballard Power Systems (BLDP) rallied in sympathy with Plug Power stock Thursday — and why not? This industrial opportunity appears still to be in the early stages. As Plug Power said in its release:
“[Plug Power] has secured GenDrive and GenKey deals with Volkswagen, BMW, Mercedes-Benz and Honda. The Company expects that success within the auto-manufacturing market will open up a plethora of global opportunities as these customers standardize on hydrogen fuel cells to power the electric lift trucks at their manufacturing sites worldwide.”
Just be forewarned: PLUG, FCEL and BLDP are all going to crash again at some point.
They’ll then probably rally again too.
Rinse, wash, repeat.
For anyone who cares about things like price-to-earnings and price-to-sales multiples, that’s not investing.
But it doesn’t mean momentum stocks like Plug Power and its industry-mates can’t be very profitable — again, if you can just hold on.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.