For many investors, Plug Power (NASDAQ:PLUG) is the best-known company for high-performing, low-cost hydrogen fuel cells. Indeed, some folks have held PLUG stock shares through thick and thin, with good results overall.
2021 has been a roller coaster ride for the shareholders, however. The sharp movements of the stock price might deter some prospective investors from getting involved.
Worse yet, PLUG stock’s recent downturn may even cause some people to dump their shares. That would be a shame, I believe, as Plug Power offers a compelling growth story that could last for years.
Analysts from a prominent financial firm seem to agree with me on that assessment. We’ll delve into that, but first we should examine the interesting price action of the stock.
A Closer Look at PLUG Stock
So, let’s rewind the clock a little bit. PLUG stock started off 2021 at around $32 or $33. That’s pretty impressive for a stock that was trading at less than $5 per share just a year earlier.
Yet, that wasn’t the end of the story – not even close. The share price shot up like a rocket in January, reaching a 52-week high of $75.49 on Jan. 26.
I often advise that traders shouldn’t chase stocks after a vertical move. PLUG stock provides a textbook example of this, as the share price fell quickly in February.
On the morning of March 9, the stock was priced slightly below $41. So, the long-term trend is still to the upside, but the short-term trajectory was downward.
Should the shareholders be concerned by this? Only if they believe that the share price won’t recover – and according to one group of analysts, there are reasons to remain strongly bullish on PLUG stock.
Attractively Priced
J.P. Morgan analyst Paul Coster is clearly not overly concerned about the recent price action of Plug Power shares.
In fact, Coster recently upgraded his rating on the stock from “neutral” (which is similar to “hold”) to “overweight” (which is similar to “buy”).
Furthermore, Coster has assigned a price target of $65 per share, which would imply considerable upside from the current stock price.
On behalf of his firm, Coster said, “We believe the stock is attractively priced at present, ahead of potential positive catalysts.”
In defense of this position, Coster cited the potential catalysts of “additional ‘pedestal’ customer wins, partnerships and JVs [joint ventures] that enable the company to enter new geographies and end-market applications quickly and with modest capital commitment.”
What really caught my eye was the reference to Plug Power’s joint ventures. I tend to concur that the company’s recently established collaborations should position Plug Power for future growth.
Progress Through Partnerships
In regard to that last statement, I don’t want you to just take my word for it. Instead, I invite you to weigh the benefits of Plug Power’s recent collaborations and joint ventures:
- A $1.5 billion investment from SK Group (the second largest conglomerate in South Korea) along with the intention to form a joint venture in South Korea
- A memorandum of understanding (MOU) signed with top automotive player Groupe Renault (OTCMKTS:RNLSY) to launch a 50-50 joint venture in France by the end of the first half of 2021
- A MOU signed with Accoina (OTCMKTS:ACXIF) to launch a 50-50 joint venture to establish a green hydrogen platform serving clients in Spain and Portugal.
Surely Coster had these collaborations in mind when he called PLUG a “story stock, appealing to thematic investors as well as generalists seeking exposure to Renewable Energy growth.”
The Bottom Line
The recent downturn in Plug Power shares doesn’t have to be your sell signal. If anything, it’s a chance to participate in the company’s future growth.
Coster tends to view the stock as “attractively priced,” and he’s provided convincing reasons to agree with that assessment.
Perhaps you’re prepared to take a position in a “story stock” for 2021 and beyond. If so, then PLUG stock is exactly what you’re looking for.
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, TalkMarkets, Finom 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.
