One of the big surprises of this year is that Plug Power (NASDAQ:PLUG) has become a red-hot growth stock. This has actually come after lackluster returns for the past two decades. But everything has changed suddenly in 2020, with PLUG stock going from $3.80 to $15. The market capitalization is now at $6 billion.
But a few days after the election, the company, which is a top player in the hydrogen fuel cell market, will report its third quarter results. And yes, Wall Street is quite bullish on expectations.
The consensus is for a spike in revenues by 80% to $110 million. As for the bottom line, the earnings per share is expected to come in with a loss of 7 cents a share.
Keep in mind that the Covid-19 pandemic has not slowed down Plug Power. Just look at some of the highlights of the quarter:
- The company announced that it has expanded its GenDrive product line. There are now three more fuel cell solutions that are targeted for European industrial and material handling vehicles. Note that Europe has been a nice source of growth for the company.
- The company signed a memorandum of understanding with Linde (NYSE:LIN) for Plug Power’s ProGen fuel cell, which includes the Class 6 and Class 8 vehicles. The vehicles are expected to be on the road early next year.
- The company announced a partnership with Apex Clean Energy, which is a leader in utility-scale wind and solar power facilities. Both companies will explore ways to promote green hydrogen in the U.S.
- Plug Power issued 30.7 million shares in a secondary offering. The stock price was $10.25.
- The company announced a new 1K ProGen fuel cell system for robots, drones and other aerospace applications. This has come as a result of the acquisition of EnergyOr.
The Big Picture
I’ve been bullish on PLUG stock for some time. The main reason: the long-term prospects look extremely favorable. As seen with the huge success of Tesla (NASDAQ:TSLA), there is substantial demand for alternative energy approaches. The sentiment is quickly becoming mainstream.
Now it’s true that the use of hydrogen fuel cells has its downsides. The costs are still high and there have been challenges with adoption. There will also need to be heavy investments in infrastructure.
But despite all this, there continue to be great strides in improving hydrogen cells. For example, according to a study from McKinsey: “By scaling up across sectors, hydrogen demand in the U.S. could reach 17 million metric tons by 2030 and 63 million metric tons by 2050, roughly equivalent to 14 percent of energy demand.”
If this prediction pans out, then Plug Power will be in an ideal position. The company has the advantages of scale and an extensive platform of systems and technologies. There is also a customer list that includes biggies like Amazon (NASDAQ:AMZN), Kroger (NYSE:KR), FedEx (NYSE:FDX) and Walmart (NYSE:WMT).
Another essential part of the strategy has been to focus on the materials handling market. This requires an energy source for long-range transportation.
And finally, the company has been smart to pursue an aggressive M&A strategy. Deals for companies like United Hydrogen and Giner ELX have expanded the product line and opened up new market opportunities.
Bottom Line On PLUG Stock
While the long-term prospects look positives, investors may still want to get a better price point on PLUG stock. The election is likely to stir up more volatility – and this could put lots of pressure on growth stocks. Let’s face it, there’s a chance that it could take a while to determine who will win.
And even if there is a slight miss for Q3 earnings, this will mean even more selling. So for now, it’s probably best to wait on PLUG stock.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.