What a wild year 2021 has been so far. The owners of FuelCell Energy (NASDAQ:FCEL) saw lots of green on their screens at first, only to watch helplessly as FCEL stock slid relentlessly lower.
I can’t prove it, but it’s possible that Reddit traders pushed FuelCell’s price too high, too fast. The market just wasn’t able to sustain those gains, apparently.
Now it looks like the Reddit crowd has turned its attention elsewhere, and FCEL stock has been left adrift. So it’s hard to generate enthusiasm about this company and its stock.
Yet that’s what contrarian investing is all about: getting excited about an asset when hardly anyone else is. FuelCell’s business is as vital as it’s ever been – and hopefully, that fact will be priced into the stock soon.
A Closer Look at FCEL Stock
A wave of interest in clean energy, coupled with the meme-stock phenomenon, propelled FCEL stock from $10 to a 52-week high of $29.44 in early 2021.
When a stock you’re holding nearly triples in a matter of weeks, it’s not a bad idea to take some profits on it. The prolonged slide of FuelCell’s share price provides an example of what can go wrong if you stay in a trade too long.
Painfully, FCEL stock fell below the $10 level in April, and declined to $6 and change during the summer. The stock closed at $6 yesterday .
Regaining $10 would be a major victory for the owners of the shares. After that, $15 and $18 should be their next targets.
For all we know, the social media traders might revisit FCEL stock and trigger another short squeeze.
However, there’s no need to sit around and wait for Reddit to save the day. As we’ll see, you can find more sensible reasons to hold the shares.
Impressive Financial Commitments
Even if the trading community isn’t hyped up about FuelCell Energy right now, the company is moving forward and staying busy.
Not just one, but two recently secured tax equity financing deals prove this point.
The first one is with East West Bank, which is owned by East West Bancorp (NASDAQ:EWBC). In this case, East West Bank’s tax equity commitment totals $15 million.
The financing will support a 7.4-megawatt fuel cell project located on the U.S. Navy Submarine Base in Groton, Conn.
FuelCell Executive Vice President and CFO Michael Bishop clearly expects East West Bank’s financial commitment to provide a significant income stream for his company:
“This efficient financing enables FuelCell Energy to retain most of this project’s long-term, recurring cash flow, and creates a structure that will facilitate additional capital opportunities that are expected to further return cash to the Company and enhance overall return on equity for this project.”
Years of Work Are Ahead
Another tax equity financing comes from Crestmark Equipment Finance, a division of MetaBank, which is controlled by Meta Financial Group (NASDAQ:CASH).
Crestmark’s commitment totals $10.2 million. The funds will support a 1.4-megawatt SureSource 1500 fuel cell project, powered by biofuels, for the City of San Bernardino’s Municipal Water Department in California.
The SureSource 1500 platform is able to cleanly produce carbon-neutral, renewable electricity 24 hours per day, 7 days a week.
Of course, these aren’t FuelCell Energy’s only ongoing projects. The company still has to complete plenty of other deals – and that’s a good thing.
As of July 31, FuelCell had a total backlog of $1,298,600. Moreover, the company indicated that it would remain busy for quite a while.
“Together, the service and generation portion of backlog had a weighted average term of approximately 18 years, with weighting based on the dollar amount of backlog and utility service contracts of up to 20 years in duration at inception,” the company specified.
The Bottom Line
Stock-price movements can easily distract investors from a company’s positive business developments. However, you don’t have to let the decline of FCEL stock dissuade you from holding onto its shares.
Dig a little deeper, and you’ll find that FuelCell Energy is staying busy and will likely continue to do so for a long time.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.