Hydrogen fueler Plug Power (NASDAQ:PLUG) proves markets are beginning to accommodate the world’s transition from fossil-fueled transportation to “greener” alternatives. It’s going to be a long and bumpy trip, however, as the volatility of PLUG stock demonstrates.
Electric vehicles are the rage lately. Investors, lined up like excited Star Wars fans outside a theater, are pushing stocks in this emerging field. Never mind that some of these companies aren’t close to producing a vehicle.
This enthusiasm is thanks to pioneering efforts of hybrid automakers and that rascal Elon Musk. Markets can now visualize battery-power vehicles being mainstream. And investors are supporting firms that will help provide needed infrastructure.
All of these are baby steps, to be sure. No one promised change of this magnitude would come fast.
More Than One Alternative
The arc of alternatives to the internal-combustion engine goes back to when the federal government-imposed fuel economy standards. This rude nudge forced automakers to seriously consider miles per gallon as much as performance.
Over time, vehicles became lighter and smaller, and mileage improved. Technology squeezed more miles and reduce pollution. Then hydrids arrived, bringing dependable 50 mpg and battery power to the traveling public.
Full battery power, while perhaps the logical next step, isn’t the only option for clean transport. While hydrogen fuel cell technology is behind door No. 2, it’s not new to the party. George W. Bush, the 43rd president, touted its virtues, But folks weren’t in the mood – yet.
Times have changed. Now, a growing number of people are strongly committed to sustainable investing. The long-term impact of ESG investing (environmental, social and governance) is helping hydrogen fuel cell development and companies like Plug Power get a foothold.
A Look at PLUG Stock
Plug Power was launched in 1997 and went public two years later. The company, based in Latham, New York, grew through acquisitions and product expansion. Plug Power booked about $230 million in revenue in 2019 and has a market cap of about $5.6 billion.
The company’s goal for 2024 is revenue of $1 billion.
Plug Power says its products provide “cutting edge hydrogen fuel cell solutions across a broad spectrum of transportation, aerial and stationery applications.”
Shares of PLUG stock are trading in at $14. In early October, the stock posted a 52-week high mark of $19.02. At the other end of that graph, PLUG bottomed at $2.53. PLUG stock can be as volatile as a teenager.
The company is slated to release its third-quarter earnings on Nov. 5.
Recently, InvestorPlace listed Plug Power sixth on a list of “10 Stocks to Ride the ESG Investing Wave.” In his article, my colleague Will Ashworth acknowledged Plug Power’s lofty valuation and its virtues, as well.
“…I believe this is one of those stocks that will grow into its valuation,” Ashworth writes. “While it might seem expensive today, I’m confident its work across many industries will pay dividends in the future.”
He adds that the company “has gone from speculative buy to plain-old all-around buy” with strong potential for the next decade.
The Bottom Line
Only the most stubborn fans of oil companies will argue that clean energy is not the future. Instead, enlightened investors are discussing how long it will take to have an economy where sustainable and zero-emission energy sources are the norm.
Plug Power deserves to be part of this timely conversation. The company is poised to be a major player in this evolving segment. It has put in more than a decade of work to get established and develop a brand. As a result, this hard work is beginning to, as they say, pay dividends.
Now, the question is whether potential investors like what they see in Plug Power and willing to put money behind shares of PLUG stock.
The answer is yes. PLUG stock should be included in a diversified portfolio that includes energy stocks. And at current prices, the company’s valuation is more reasonable.
On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C.