Plug Power (NASDAQ:PLUG) has enjoyed quite the year so far. But what’s in store for investors still considering PLUG stock? Let’s take a look at what’s happening off and on the price chart.
It has been a spectacular year for electric vehicle companies. Tesla (NASDAQ:TSLA), of course, is a standout with a market capitalization of nearly $300 billion. The valuation is more than ten-fold Ford Motors (NYSE:F).
To be fair, Tesla is truly at the forefront of the electric vehicle space. It has made EVs popular among environmentally conscience and otherwise trendy consumers. But investors shouldn’t make the mistake of thinking Tesla is the only play in this exciting area — or that battery-powered electric vehicles are the future of transportation.
The Future Is All About Hydrogen
The alternative energy market is extremely diverse, and it’s becoming much larger each and every year. This market is truly unstoppable. Hydrogen-based transportation is a growing part of this trend given critical size, waste and travel advantages over EVs driven by batteries. And one long-time player in the space is hydrogen fueling specialist Plug Power.
Already enjoying attractive deals with Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN) to power those companies’ commercial forklift operations, 2020 has also proven a breakout year for Plug Power. It has been able to execute on its near-term goals and is paving the way for much greater business success.
Plug Power smartly acquired United Hydrogen Group and Giner ELX this past spring. As InvestorPlace’s Larry Reamer explains it, the combination allows the company to produce tons more — literally and figuratively — of hydrogen. It will also help it provide on-site refueling of hydrogen fuel cells for e-commerce businesses around the globe that are ramping up their use of hydrogen-driven vehicles.
And with the worldwide market for fuel cell electric vehicles (FCEVs) estimated at $300 billion, PLUG is continuing to execute strongly on its intermediate-term plans for annualized sales of $1 billion. It’s also putting itself firmly in the driver’s seat of this massive and growing market.
PLUG Stock Weekly Price Chart
To say the least, the bullish trend for the FCEV market should have investors’ interest. That underlying momentum hasn’t gone unnoticed in PLUG stock. Over the past 2.5 years, shares have traded from below $1 to nearly $10.50 at the stock’s recent highs.
Some might think it is time to steer clear of Plug Power stock, but the chart tells a different story.
Technically, PLUG appears overbought based on its stock price in relation to the Bollinger Band and stochastics. It’s understandable, and easy enough to see on the provided weekly chart. But Plug Power is also a growth story being rightfully powered by momentum investors.
How to Trade Plug Power Stock
So what’s the bottom line? Well, until the narrative changes radically, Plug Power’s 1,200% return and $2.85 billion valuation are in position to grow even larger. Currently, PLUG stock has formed a corrective pullback roughly 21% in depth. It’s common, healthy and for a growth story of Plug Power’s caliber, stands to offer today’s investors a solid entry within an emerging and longer-term bullish trend.
My suggestion today would be for investors to monitor PLUG shares for a reassertion of its bullish trend. Within today’s pullback pattern, bullish price confirmation of this week’s inside candlestick would provide that kind of opportunity.
I’d also offer the advice for investors to use Plug’s options market to their benefit and put together a collar or married put strategy for stronger, risk-adjusted positioning.
Investment accounts under Christopher Tyler’s management own positions in Plug Power (PLUG) and its derivatives, but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.