The Green Energy Boom Favors a Position in FuelCell Energy

With the possible exception of Plug Power (NASDAQ:PLUG), FuelCell Energy (NASDAQ:FCEL) could be considered the most popular company among fuel cell stock traders. Due to its fairly low price and its heavy trading volume, FCEL stock is a prime investment candidate for folks who’d like to capitalize on the momentum of the green-energy movement.

a picture of a fuel cell
Source: Kaca Skokanova/Shutterstock

If there’s any potential issue with FuelCell stock, it’s that the share price has gone parabolic in the past few months. Value-focused investors might balk at buying a stock that’s trading at 10 times its price from October.

I can understand how that might be off-putting for some folks. On the other hand, an argument could be made that FCEL stock is worth owning at just about any price due to the prospects of future growth in the clean energy market.

It’s the classic value-versus-growth debate, and there are no “right” or “wrong” answers here. All we can do is weigh the evidence on both sides and, hopefully, come to a sensible decision about whether or not to own FCEL stock.

A Closer Look at FCEL Stock

If there’s any argument to be made against owning FCEL stock, it’s based on the price action. Admittedly, I can see why value-oriented investors might take issue with this stock.

In early October, FCEL stock was trading at around $2 per share. In fact, the stock price stayed between $1 and $3 for much of 2020.

There’s an old saying in the markets: “Be right and sit tight.” Another old saying is: “The longer the base, the higher in space.” In hindsight, both of these sayings could be applied to FuelCell.

As it became more apparent that Joseph Biden could win the presidency, and that the Democrats might gain a majority in the U.S. Senate, the FCEL stock price started to take off like an airplane.

And once the FCEL stock buying frenzy commenced, the bulls hardly took a breather. The FuelCell share price has currently achieved a stunning 52-week high of $29.44.

As of Feb. 17, FCEL stock settled at $22.06, so be aware that a pullback might be imminent. Also, be advised that FuelCell’s trailing-12-month earnings per share is -42 cents. Hopefully, the company can turn that negative number into a positive one in 2021.

From Big Tech to Green Tech

Is Green Tech the new Big Tech? The idea of clean fuel stocks posting bigger gains than semiconductor and smartphone stocks was inconceivable just a few years ago, but the times have changed.

To be more accurate, I should say that the government has changed. In January, the Democratic Party gained a majority position in the U.S. Senate.

With that, the Democrats gained control of the White House and both chambers of Congress. The majority in the Senate is slim, but this still leaves open the possibility of energy policy reform.

And so, green technology is all the rage among financial market traders nowadays. The markets tend to be forward-looking, and they’re predicting big changes in the laws and regulations pertaining to fuel cleanliness.

How This Will Help FCEL Stock

In effect, a Democrat-controlled government could clear the runway for much higher prices in FCEL stock.

Biden has called climate change the “number one issue facing humanity.” He even set a target to put the U.S. on a path to net-zero emissions by the year 2050.

FuelCell Energy was early and ambitious in advancing green technology. In particular, the company’s SureSource hydrogen plants can provide a fuel source that’s not only ultra-clean but cost-efficient.

FuelCell’s affordable distributed hydrogen generation solutions are well suited for transportation, industrial and a range of other applications.

This could help to explain how the company managed to take in revenues of $71 million in 2020, a 17% improvement over FuelCell’s 2019 revenues.

The Bottom Line

FuelCell was an early participant in the green technology movement. Today, the shareholders are reaping the benefits of FuelCell’s technological advancements.

We should acknowledge that FCEL stock has moved far and fast. Yet, if you believe in the future of the clean energy movement – and the regulatory changes that might be coming soon – then it’s perfectly okay to hold your FuelCell shares.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarketsFinom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. 


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