Since the last time I wrote about Plug Power (NASDAQ:PLUG), in an article published on Nov. 13, the company has added a couple of more powerful, positive catalysts. In 2020, it seems PLUG stock added upbeat macro and/or micro movers every six weeks or two months. And that pattern is continuing.
Consequently, I remain bullish on the shares, despite their huge advance both this year and in recent weeks.
Plug Power’s most recent positive catalysts are its expanded deal with Walmart (NYSE:WMT) and Joe Biden’s victory in the 2020 presidential election.
The Walmart Deal
On Dec. 15, Plug Power announced that it was supplying the retail giant with additional “hydrogen and fuel cell solutions” for use in the company’s e-commerce business.
Plug Power reported that it began providing Walmart with new products in August and will sell it additional offerings in 2021.
In an early April column, I predicted that Plug Power will benefit from the strength of its largest customers – including Walmart, Amazon (NASDAQ:AMZN), and Kroger (NYSE:KR) – during the novel coronavirus pandemic. In the same article, I wrote that, to the extent that Walmart and Kroger expect the e-commerce boom to last after the pandemic, they “could very well order more fuel cells from Plug Power in the near-term than previously expected to prepare for an ongoing e-commerce demand surge.”
Apparently, it actually took Walmart a little while to determine that the surge would be sufficient to justify new, meaningful orders of Plug’s vehicles. And recently, the retail giant apparently became even more bullish on the outlook of its e-commerce business. Thus, it lodged additional orders for Plug’s vehicles.
And boding very well for the outlook of Plug Power and of PLUG stock, the senior director of Walmart Supply Chain, Jeff Smith, said in a statement:
“At our distribution facilities across the country, our decision to be an early adopter of Plug Power’s hydrogen fuel cells has helped us manage and meet the increased demand for food and basic supplies.”
Obviously, Plug Power’s products can perform the same function other huge retailers.
Biden’s Victory Should Boost Plug Power
President-elect Biden pledged to spend a tremendous amount of resources on fighting climate change. Given Plug Power’s huge investments in the development of green hydrogen and fuel-cell trucks, the company stands to benefit a great deal from the new administration’s policies.
Moreover, both Biden and his Transportation Secretary-designate Pete Buttigieg have been big supporters of electric vehicles and building many more electric-vehicle charging stations. As a result, I believe that they are also likely to support Plug’s extensive efforts to develop stations that disperse green hydrogen and trucks that use the fuel.
Indeed, I would be very surprised if Plug Power does not receive extensive, new tax breaks and projects during the incoming administration’s tenure. Congress recently reportedly extended the tax credit for wind and solar energy. It also provided a sizable $35 billion for energy research. This suggests that lawmakers are already stepping up their support of renewable energy ahead of the transition to the new administration.
The Bottom Line on PLUG Stock
With new orders from Walmart, fuel-cell maker Plug Power is poised to benefit tremendously from the explosion of e-commerce. Also, the company should get a huge financial boost from the Biden administration.
Given these positive catalysts, along with the company’s multiple other, upbeat drivers which I’ve described in the past, I think that PLUG stock remains a good buy for long-term investors at its current levels.
On the date of publication, Larry Ramer held a long position in Plug Power.
Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been Roku, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.
