With very few avenues remaining for the Trump administration to contest the 2020 election results, Joe Biden will become the 46th President of the United States. While there are myriad implications of the incoming administration, one of them is the reinvigorated push toward clean energy. Naturally, this should serve Plug Power (NASDAQ:PLUG) very well. And already, PLUG stock is up nearly 710% year-to-date.
While this might raise concerns of prospective investors ending up holding the bag, the underlying ecosystem is incredibly compelling for Plug Power’s remarkable revival.
Shortly following its initial introduction, the company enjoyed mercurial success. However, that was short lived in part due to poor timing; this was right when the tech bubble expanded and burst in glorious fashion. Unfortunately, that also left PLUG stock on life support for many years.
Now, Plug Power is looking to make up for lost ground. And at this juncture, the timing couldn’t be more favorable. According to the Biden Plan, the incoming administration wants to implement policies that will have the U.S. economy achieve net-zero emissions by no later than 2050. Essentially, PLUG stock has come full circle.
When Plug Power first made its public market debut, gasoline prices were on the verge of exploding higher. Unfortunately, the technology and infrastructure available at the time did not allow for a viable alternative fuel solution. Therefore, traditional combustion industries won out by making their vehicles and platforms more fuel efficient.
Fast forward to our new normal and gasoline prices have plummeted from their historical highs. But this hasn’t necessarily been a comprehensive boon for combustion-based platforms. Instead, many companies have considered the environmental impact of carbon emissions, along with costs associated with the last-mile problem. This led to a rethink in the broader transportation and equipment market, bolstering the case for PLUG stock.
In other words, the timing is now just right for Plug Power.
Stationary Power Is the Underappreciated Catalyst for PLUG Stock
Arguably, when most investors consider the case for PLUG stock, they’re thinking about its implications for zero-emission fleets. This has always been a relevant market because of the last-mile problem. Long story short, it’s the last leg of the delivery journey — which features stop-and-go traffic and other inconvenient disruptions that add up — that’s the costliest.
Fortunately, alternative-fuel delivery fleets can help substantially mitigate this problem. Further, innovations in unmanned aerial vehicles can make consumer conveniences that people currently demand, such as same-day or next-day deliveries, a more feasible reality. As well, the pandemic has made addressing the last-mile problem even more critical because of consumer activity dramatically shifting toward online channels.
But an underappreciated catalyst for PLUG stock could come in the form of stationary power. Because fuel cells generate electricity through non-combustion mechanisms, they offer multiple utility purposes, such as in primary power plants, backup power units or combined heat and power. Again, this was a relevant industry well before our new normal. However, the pandemic, along with the many disruptive events of 2020, has sparked another collective rethink.
Although renewable energy sources like wind and solar have captured the public’s imagination because of their naturally available supply, they do have one disadvantage: they’re intermittent. Obviously, wind energy farms can’t cultivate energy if there’s no wind. And solar panels are pretty much useless in the dark. This potentially imposes a huge crisis when energy demands suddenly spike up, as we saw this year with California’s rolling blackouts.
To get around this challenge, we don’t just need a robust renewable energy industry. Instead, we must also have battery storage systems to stockpile energy to feed unusual demand spikes. Therefore, the concept of stationary power to serve as backup units for critical infrastructure will only become more relevant in the years ahead. In addition, the stationary power initiative aligns perfectly with the incoming administration’s broader energy policies.
A No-Brainer Buying Opportunity on the Dips
Frequently in the pre-pandemic days, I pounded the table about the coming convergence of multiple technological solutions that will power the next leg higher in the economy. I call it the Roaring 2020s and PLUG stock will likely be one of the key benefactors.
When Plug Power first launched, it did so ahead of its time. But that didn’t pan out financially because the infrastructure and society were still mired in “analog” thinking. Now, we’re rapidly shifting toward a renewable future, one where combustion is both economically and societally undesirable. This development should put PLUG stock back in the driver’s seat.
Therefore, the approach is very simple. When you see shares dip, make sure to plug yourself in.
On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, neither Matt McCall 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.
