Does hydrogen fuel cell company Plug Power (NASDAQ:PLUG) belong in your portfolio? Best known for supplying zero-emission electric forklifts used in retail and grocery warehouses, PLUG stock has found itself in the spotlight in 2020.
After a slow start to the year, PLUG saw rapid growth through the summer. It’s currently down about 8.5% since the start of September, raising the question of whether now is an opportunity to snap up shares of Plug Power at a good price.
Ultimately, that depends on whether you feel that the rapid rise in PLUG stock was warranted.
Gains Powered by Alternative Energy Hopes, Deals, and Analyst Upgrades
Shares in Plug Power were relatively flat for nearly two decades. That changed in 2019 with some upward movement.
Shares started the year around $1.30, and by November were approaching the $4 level. After a brief spike in February, they remained below $4 for the first half of 2020, and then suddenly caught fire in June, culminating in a $14.13 close on September 1.
That’s a tidy 336% gain since the start the year. There were a few things going on back in the summer that helped to light the fuse under PLUG stock.
Electric car stocks have been hot in 2020, and some of that market enthusiasm has rubbed off on other alternative energy sources. Hydrogen stocks have certainly been beneficiaries of that halo effect. In January, the hottest new electric pickup truck was announced, and it offered a hydrogen fuel cell option — raising the prospect that the future may have come early. Wall Street became enamored with hydrogen fuel cell stocks over the next few months, including Plug Power.
Adding to the appeal of PLUG stock was the pandemic. As online shopping spiked, so did retailer warehouse activity. That’s squarely in Plug Power’s wheelhouse, with its focus on hydrogen-powered, zero emission forklifts. It’s estimated that 25% of U.S. food and groceries are moved around warehouses with the help of Plug Power hydrogen fuel systems. During the pandemic, that surged to 30%.
As PLUG stock began to climb in June, its growth was further fueled by a series of analyst upgrades. In June, PLUG received upgrades from both B. Riley and Cowen after the company announced several acquisitions expected to strengthen its ability to distribute hydrogen. That was followed by a June 30 upgrade by J.P. Morgan. Calling the company a “clean energy juggernaut,” H.C. Wainwright raised its price target to $14 in July.
On August 20, Plug announced a significant deal. It won a contract to supply its hydrogen fuel cell technology to U.K. supermarket Asda. Landing the U.K.’s third-largest supermarket chain was a win on its own, but also give Plug Power a foothold in the European market.
The PLUG stock rally only began to falter after short-seller Citron Research tweeted that shares should soon be trading for $7 again.
Bottom Line on Plug Power
PLUG stock gets an ‘A’ rating in my Portfolio Grader, but there are clearly still skeptics out there. Before deciding about adding Plug Power to your own investment portfolio, it’s worth having a look to see what other analysts think about the company and its prospects.
The Wall Street Journal is tracking nine analysts who cover Plug Power. They have it rated as a consensus buy. However, their average 12-month price target of $13.03 leaves virtually no upside. They’re buying into the long term prospects for Plug Power, but there seems to be a feeling that the PLUG rally that began in June is over — at least for the short term.
Given that sentiment, there may be no rush to snap up Plug shares, although they do have great potential for long-term growth. And if you aren’t convinced Plug Power is the right hydrogen fuel cell play, InvestorPlace contributor Chris Markoch has some other suggestions worth considering.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
