Plug Power (NASDAQ:PLUG) has taken investors for quite a ride over the past eight months. While oil and gas companies took a beating in 2020, alternative energy companies saw interest in their shares grow. Electric car stocks took off, and hydrogen stocks soon followed.
The election of President Joe Biden with his administration’s commitment to spending $2 trillion on a 100% clean energy economy sealed the deal. By the time all was said and done, PLUG stock closed 2020 with growth of over 950%. That was especially impressive considering the stock had languished in the doldrums for over a decade.
PLUG stock continued to surge in 2021 — it’s already just a point away from a triple-digit gain so far this year — but there have been a few bumps. A few big single-day drops have unnerved more than a few investors. However the growth continues.
How hot has PLUG stock been? Last fall, analysts kept issuing upgrades but simply couldn’t keep up with its trajectory. For example, Morgan Stanley analyst Stephen Byrdon upgraded PLUG from a “hold” to a “huy” last September. On Dec. 21, he raised his price target to $38. Just three weeks later, shares had blown past $50.
However, this year has seen several drops that have tested the nerves of Plug investors. On Jan. 27, PLUG stock fell 12%. On Feb. 10, it slid over 4.5%. These two big movements have a common cause. Plug Power decided to take advantage of its high-flying stock price to issue more shares. The additional cash raised will help the company to pursue growth opportunities. That’s important with all the government contracts expected to be coming. However, more shares raises the risk of diluted value for existing shareholders.
Yes, there have been bumps. But there’s nothing on the radar that suggests this is anything but turbulence. Odds are good that Plug Power will ride it out.
Don’t Worry If Fuel Cell Cars Lose to EVs
Much of the uncertainty over hydrogen fuel cells has been whether they will be able to surmount the lead that battery-powered EVs have.
Both are zero-emissions technology, but neither is perfect. Hydrogen fuel cells have the advantage of much faster refueling and longer range. However, producing hydrogen is energy-intensive and there are few refueling stations. EVs have been increasing their range, charge station networks are growing, and many consumers could charge their EVs overnight at their homes. Some auto makers are hedging their bets, and still releasing new hydrogen-powered cars, but the scales are definitely tipping toward battery-powered EVs being the long-term winner at this point.
That might sound bad for Plug Power and point toward its stock growth being tenuous. However, Plug Power’s focus is on industrial applications, not consumer. Warehouse forklifts and commercial fleet vehicles.
If hydrogen loses the race to be the zero-emission option of choice in the consumer auto industry, that’s no big deal. Hydrogen has a big advantage in the applications Plug Power is focused on. Warehouses can easily deploy hydrogen filling stations, and vehicles can be re-filled quickly. Waiting around for a battery to charge isn’t an option, especially when some of these facilities are operating 24/7.
Bottom Line on PLUG Stock
No stock is entirely without risk. Alternative energy stocks (especially hydrogen stocks) made huge gains in 2020. That could slow. Part of that is a realization that the money from the government is not going to start flowing all at once. And there is still a battle raging over whether battery-powered EVs will continue their dominance, or if hydrogen fuel cell systems like those made by Plug Power will ultimately win the day.
That being said, analysts generally look favorably on PLUG stock. The investment analysts polled by CNN Money have it rated as a consensus “buy.” They’ve had that same position for at least the past six months. Their median $75 price target holds 17% upside, even after the big gains posted already this year.
If you’re interested in adding a hydrogen fuel cell company to your portfolio, choosing one with a long history, proven products, and a focus on industrial applications like Plug Power is the way to go.
On the date of publication, Louis Navellier had a long position in PLUG. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.