Investors in Plug Power (NASDAQ:PLUG) may have witnessed one of the worst meltdowns of a renewable energy stock to date. From November last year to early March, PLUG stock had a meteoric rise. PLUG share price rose from around $14 to a high of $75 within a few short months—a gain of 5x within a very short timeframe.
However, investors elation didn’t last long. Due to the fading momentum in growth names, along with the company’s own missteps, PLUG stock entered into a downtrend. Missteps, such as having to restate its financials, caused investors to dump their PLUG shares until it reached a low of $19. Investors who bought at the peak saw the value of their holdings slashed by more than 75%.
Despite the rollercoaster for PLUG stock, management has been steadily at work to build value for the company. There has been renewed interest in PLUG stock. In this month alone investors saw a 50% gain as the stock rose from $25 to $38. I didn’t think the stock was worth investing in during its meteoric rise as the market cap has strayed too far from its intrinsic value. But at these prices, I believe PLUG stock may be worth a look.
Plug Power Has an Established Customer Base
As a long-term investor, I like to get a solid grasp of what exactly the company does. This allows me to have a clear understanding of the business that will help me hold the stock in times of volatility.
In the case of Plug Power, the company is a leading provider of hydrogen fuel cell power solutions. These products basically use hydrogen to generate power as opposed to more conventional fuels. Hydrogen-generated power has zero carbon emissions with its by-product only being oxygen.
The company is focused on the fuel cell system itself which is applicable in a wide variety of industries. Plug Power has decided to focus on the vehicle and logistics markets as a primary focus. The company’s fuel cell engines power over 52,000 forklifts. Over 80% of the company’s existing customers are “blue-chip” companies and include major retailers such as Walmart (NYSE:WMT), Amazon (NASDAQ:AMZN), and Home Depot (NYSE:HD).
Plug Power has been in business for over 20 years and has proven itself a reliable partner. In recent years there has been a demand for large corporations to be more environmentally sustainable. This has created a massive market opportunity for companies like Plug Power. Where Plug Power has an advantage is the relationships it currently has with these “blue-chip” companies. This will make selling to them much easier.
According to the company, it’s forecasted that there will be five million forklifts in the U.S. and Europe by 2030. This translates to $750 million in revenue as early as 2024.
Hydrogen as the Future of Energy
In the future, I can see hydrogen fuel cells in a wide variety of industries. It’s the application of Plug Power’s technology to other verticals that is driving a lot of investor interest in PLUG stock. The company has recently inked a major partnership with Renault and Lhyfe.
I won’t get into the specific details of these partnerships in this article except to say that these are extremely promising. Both Renault and Lhyfe are major players in their industries. It shows the potential of Plug Power’s fuel cell technology and ability to make inroads in the transportation and power generation industry. There is reason to believe that Plug Power’s technology may be “best of breed” considering the quality of its client base and partnerships. If that is the case Plug Power’s TAM is enormous. Green Hydrogen alone can be a $10 trillion market according to a study by Goldman Sachs.
All that being said, I believe PLUG stock deserves a place in a green energy portfolio.
On the date of publication, Joseph Nograles 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.