Plug Power (NASDAQ:PLUG) has plenty of strong, positive catalysts that can propel PLUG stock much higher.
As I noted in a couple of recent columns, the company is benefiting from the tremendous growth of e-commerce, as well as the lack of access to gasoline during bad storms. Of course, extremely ruinous storms have become much more frequent due to climate change, increasing demand for vehicles that can be charged quickly with on-site fuel.
This week, I’m even more convinced about the positive outlook of PLUG stock. First of all, Amazon’s (NASDAQ:AMZN) results showed that the growth of e-commerce is accelerating even more rapidly than analysts had thought. And, as I’ve noted previously, Amazon has agreed to buy tens of millions of dollars of Plug Power’s products. I have little doubt that, as Amazon’s e-commerce business accelerates, PLUG’s revenue from AMZN will also accelerate.
Similarly, as Walmart (NYSE:WMT) expands, the growth of Plug Power’s revenue from that giant will also accelerate.
During Plug’s recent conference call with analysts on Jan. 30, CEO Andy Marsh revealed that the two-year $172 million order the company had previously announced came from an existing customer. That fueled speculation that the order came from either Amazon or Walmart.
Conference Call Reveals More Developing Catalysts
But management mentioned multiple other positive catalysts for PLUG stock on the call. Marsh reported that the company had obtained an additional deal with one of its previous customers. Under the deal, the company will be supplying 2,000 of its GenDrive fuel cells. The customer will use the vehicles in 12 of its locations. And Plug Power expects to obtain over $50 million of revenue from the deal this year.
There was some speculation that the latter deal was with Home Depot (NYSE:HD). In 2018, the retailer announced that it would add 170 distribution facilities by 2023. These facilities would help enhance its e-commerce operation. If this is the case, Plug Power can sell many thousands more vehicles to Home Depot over the new few years. As I predicted, PLUG is continuing to benefit from the ongoing e-commerce revolution.
Additionally, Marsh noted that both BMW and Fiat Chrysler (NYSE:FCAU) are now using the company’s products. He added that multiple other auto companies are testing Plug’s vehicles. It sounds like many European car companies are poised to use PLUG’s material-handling vehicles in their factories. That should become another huge market for PLUG.
Two other potential huge markets for the company are ports and airports. The CEO mentioned that Plug Power had sold its products to two European airports, and he noted that it could use its existing infrastructure to support hydrogen vehicles in seaports.
Long-Shot Catalysts
Hyundai plans to spend about $6.4 billion on developing “500,000 fuel cell systems for passenger and commercial vehicles by 2030.” Toyota (NYSE:TM), in partnership with Kenworth, is building ten hydrogen-powered trucks that will be used by several enterprises, including Los Angeles’ ports and United Parcel Service (NYSE:UPS). A startup called Nikola has already sold 800 hydrogen-fueled trucks to Anheuser-Busch (NYSE:BUD) and has other customers. According to Nikola CEO Trevor Milton, hydrogen-powered trucks can carry much more weight than electric trucks.
Marsh stated that PLUG has hydrogen-fueling stations across the U.S. that can currently enable a hydrogen-fueled vehicle to travel across the country. As a result, if hydrogen-fueled trucks do proliferate around the country in five or ten years, PLUG will be able to benefit by selling hydrogen to those trucks.
Additionally, Plug Power is already working with its massive Europe-based partner, Engie, to build hydrogen-fueling stations in South Africa. Multiple European cities are slated to ban diesel in coming years. Then there could be huge demand for hydrogen-fueled trucks on the continent. Engie and PLUG can work together to build many hydrogen-fueling stations there.
The Bottom Line on PLUG Stock
With huge retailers and large auto companies embracing PLUG’s solutions, the company will easily meet its goal of raising its annual revenue to $1 billion by 2024. That makes Plug Power stock, with a market capitalization of $1.2 billion, a great buy. And if some of its other potential drivers materialize, the shares can climb as much as 400% in the next five years.
As of this writing, Larry Ramer owned shares of PLUG stock.
