The stars are perfectly aligning for hydrogen fuel cell company FuelCell Energy (NASDAQ:FCEL). In fact, after FCEL stock and its hydrogen peers rallied last week, things are looking up again Monday. FuelCell shares are up another 50% in intraday trading. So what is behind this new move?
We will start with a quick refresher. Importantly, FuelCell Energy is one of the leading players in the fuel cell niche. This means that it uses fuel cells to generate power for a variety of customers, including through its network of SureSource power plants. Because of its role in this market niche, FCEL stock has been red hot in recent weeks.
Just last week, we saw FuelCell shares rocket higher as investors upped their bullish expectations for hydrogen. This was largely thanks to news the United Nations wanted to phase out coal power. However, a few other catalysts were helping things. Rising oil prices make hydrogen fuel cells more attractive, and investors in the electric vehicle market are increasingly eyeing fuel cell electric vehicles (FCEVs). In fact, TV analyst Jim Cramer said that FCEVs were better bets than BEVs.
With all of this in mind, it makes sense why FCEL stock is surging higher today. However, behind the 50% move is one other big catalyst.
FCEL Stock and China Plans
Importantly, there is no concrete news from FuelCell Energy. Instead, the company seems to be riding a general wave of enthusiasm in hydrogen equities. As we are seeing today, one catalyst is taking that wave to new peaks.
Over the weekend, investors turned their attention to a 15-year plan from the Chinese government. In that document, officials shared new plans for transportation and clean energy vehicles. Putting two and two together, it is not surprising that fuel cell electric vehicles play a huge role in this report. In fact, the State Council says it will turn its attention to the supply chain for fuel cells, and specifically, it will focus on building FCEV buses and trucks. As part of this, the country wants to have 1 million FCEVs on the road by 2030.
To get there, China is going to need to take a long look at its hydrogen production. Right now, it looks like a few things will help it reach its 15-year goal. These include a new wind and solar plant, as well as an investment from state-owned oil giant Sinopec.
So where exactly does FCEL stock fit in? Well, although FuelCell Energy is not explicitly involved in these plans, investors are likely enthusiastic that China is taking hydrogen fuel cells seriously. As the largest automotive market in the world, this could broadly boost demand for FCEVs. Additionally, it could be a sign of what is to come in the United States. That is especially true thanks to the upcoming inauguration of President-elect Joe Biden. Remember, Biden has promised to invest $2 trillion in clean energy initiatives.
As FCEL stock surges, note that it is not alone. Peers Bloom Energy (NYSE:BE), Plug Power (NASDAQ:PLUG) and FCEV company Nikola (NASDAQ:NKLA) are trending higher.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.
