For years, Plug Power (NASDAQ:PLUG) was known primarily as a producer of fuel cells. PLUG stock investors can still own the shares because they like its fuel-cell business, but there’s more to the company now.
The clean-hydrogen economy presents a ground-floor opportunity for many companies. Plug Power is an early and ambitious entrant into this niche market. Many owners of PLUG stock might not be aware that Plug Power is “the largest buyer of liquid hydrogen, having built and operated a hydrogen highway across North America.”
Are the shareholders ready to ride that hydrogen highway with Plug Power? The highway is a major part of the company’s business model now. Fortunately, this business segment could be even more lucrative than fuel cells.
A Closer Look at PLUG Stock
Alas, the days of the shares trading over $100 are evidently in the past. The stock is currently working towards the psychologically significant $10 level. That’s good progress as PLUG briefly dipped below $1 per share in early 2017.
The bulls can relish the astonishing run-up of the share price that took place in June. Specifically, the stock rose from less than $5 to $9 during that month.
Was that price increase too much, too fast? Not if Plug Power can effectively move beyond its core competency of fuel cells and into the clean-hydrogen space. It’s an ambitious gambit, but investors would be hard-pressed to find a stronger contender in this burgeoning market.
Why Choose the Hydrogen Economy?
Hydrogen is the universe’s most abundant element, so it’s a natural candidate to become a top fuel source. Unlike fossil fuels, hydrogen will definitely never be depleted.
Not only that, but hydrogen is comparatively clean. Hydrogen should only emit two things when it’s being consumed: heat and water vapor. This property of hydrogen makes it generally cleaner and greener than petroleum-based fuels across multiple applications.
On top of all that, hydrogen offers an economic benefit in the form of what Plug Power calls “energy security.” The company explains this better than I ever could:
“Locally-produced hydrogen increases the energy security of every nation by decreasing the need for energy imports while creating industry and employment growth opportunities across a variety of markets.”
Beyond the energy-security benefits, clean hydrogen is a prime example of a growth industry. In that vein, Plug Power cites data from a McKinsey report suggesting that by the year 2050, a hydrogen-based economy “could support global revenues of more than $2.5 trillion per year.”
A Big Move into the Hydrogen Space
So, how is Plug Power proving its commitment to the clean-hydrogen economy? If there’s any doubt as to the company’s commitment, two recent acquisitions should put it to rest.
Specifically, Plug Power recently acquired United Hydrogen and Giner ELX. With the capacity to to produce 6.4 tons of hydrogen on a daily basis, United Hydrogen is among the biggest privately held hydrogen producers in the U.S.
Giner ELX, meanwhile, is a premier PEM (or proton exchange membrane) electrolysis company that sells hydrogen-fuel-generating and storage solutions. Plug Power’s acquisitions of these two companies demonstrates that it’s fully prepared to go all-in on the clean-hydrogen market.
Plug Power CEO Andy Marsh praised the efforts of United Hydrogen and Giner ELX to “secure broad participation in the hydrogen economy” as well as “achieve the objectives of a clean environment and reduced dependence on foreign oil.”
And now, Plug Power is better equipped to fight those battles. A bigger, bolder Plug Power should have more than enough resources to take the hydrogen-based economy to the next level.
The Bottom Line
If you want to view PLUG stock as a trading vehicle for fuel-cell technology, that’s fine. However, Plug Power’s venture into the emerging clean-hydrogen economy means that the company is expanding its horizons, and so should its shareholders.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
