I have to admit, I’ve used Plug Power (NASDAQ:PLUG) as a cautionary tale on a number of occasions when advising folks to be wary of IPO hype. If you can believe it, the PLUG stock price once traded in the $1,500 range; only a few years later, Plug Power stock was under 20 cents.
Today, PLUG stock is in the low-to-mid $2 area and seems to have found a comfortable range – or a boring range, depending on whom you ask.
Looking beyond the recent price action, there’s actually nothing dull about this stock at all. Indeed, PLUG shares shed a gut-wrenching 48% last year but then gained more than 81% in the first half of 2019. In just the month of March, Plug Power stock gained a dazzling 34%.
Given the fact that this stock has traded much higher than the current range, I’m actually prepared to go out on a limb and lean bullish on PLUG. I feel that I’m in good company here, as Plug Power has received a capital infusion from Amazon (NASDAQ:AMZN) to the tune of $600 million as well as substantial product orders from the likes of from Walmart (NYSE:WMT) and General Electric (NYSE:GE).
No Shortage of Optimism
Perhaps more than anything else, what fueled PLUG stock’s incredible performance in the first half of 2019 was analyst enthusiasm. For instance, B. Riley FBR analyst Carter Driscoll issued a buy rating on Plug Power stock along with a $3.50 price target; meanwhile, analysts at H.C. Wainwright & Co. also published a buy rating and assigned an eye-opening $4 price target for PLUG shares.
Plug Power CEO Andy Marsh has been equally optimistic and has put some of his own skin in the game, buying 12,286 PLUG shares at an average price of $2.44, representing a $30,000 transaction. Sure, I’ve seen larger insider purchases, but at least Marsh is putting his money where his mouth is, and I feel that’s a good sign.
A Second-quarter Stunner?
Speaking of enthusiasm, Plug Power released predictions for Q2 2019 that were rather encouraging, to say the least.
In particular, the company’s statement asserted that Plug Power “is on track to deploy approximately 2,000 fuel cell units to a variety of new customers and for expansions of many existing customer programs,” which would (assuming they meet this objective) constitute a record for the company.
The press release added that “the deployment volumes equate to an approximately 70% increase from the prior year second quarter” and that Plug Power “remains on target to meet full year guidance of $235 to $245 million in gross billings and positive adjusted EBITDA for the full year of 2019.”
That’s big talk, but the company’s CEO seems prepared to back it up, with Marsh pointing out the industry-changing potential of Plug Power’s ProGen fuel cell engine product line as well as the company’s acquisitions of EnergyOr – a leader in advanced lightweight and compact PEM hydrogen fuel cell systems – and American Fuel Cell, a premier developer of Membrane Electrode Assembly (MEA) technology, the key catalyst for fuel cells to create power.
The Bottom Line on Plug Power Stock
Plug Power has characterized itself as “the innovator that has taken hydrogen and fuel cell technology from concept to commercialization,” and I happen to concur with that assessment.
Granted, I’ll continue to use post-IPO Plug Power as a cautionary tale against buying on media hype, but at the current valuation I’m fully prepared to recommend PLUG stock as a “buy” if you’re anticipating an electric Q2 in the making.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
