Ready To Lead Alt-fuel Ecosystem, Plug Power Stock Can Double in a Year


With Plug Power (NASDAQ:PLUG) continuing to develop new, impressive partnerships and even reaching for the skies for the first time, the outlook for PLUG stock continues to be very strong.

3d render image of hydrogen energy fuel cell from Plug Power
Source: Shutterstock

Meanwhile, there are multiple, new reasons to believe that the hydrogen ecosystem is poised to become quite widespread and powerful, with Plug Power as one of its key leaders.

Given these points, along with the company’s 2025 sales target of $3 billion, I believe that PLUG stock can easily double within a year. The share price is currently 47.7% off its January high.

Plug Power’s New Partnerships

On Oct. 6, the company announced that it had formed a joint venture with a unit of South Korea’s SK Group, a major conglomerate, “to provide hydrogen fuel cell systems, hydrogen fueling stations, electrolyzers and green hydrogen to the Korean and other Asian markets.”

A week later, management announced that it had agreed to cooperate with oil refining giant Phillips 66 (NYSE:PSX) to “explore ways to deploy Plug Power’s technology within Phillips 66’s operations.” It closed out October with the news that it was collaborating with France-based renewable energy developer Lhyfe to jointly pursue and develop green hydrogen generation plants throughout Europe.

But the most exciting news in a month of big announcements was the Oct. 13 reveal that Plug Power and giant European airplane maker Airbus (OTCMKTS:EADSY) would partner ” to study the feasibility of bringing green hydrogen to future aircraft and airports worldwide.”

The latter partnership could result in Plug Power becoming a leading supplier of hydrogen to many airlines around the world. Such a development alone, in my opinion, could easily generate $3 billion to $5 billion of annual sales for the company by 2030.

It all fueled an almost-50% rise in the PLUG stock price for the month.

Hydrogen Ecosystem Poised to Take Off

Meanwhile, many governments are taking new steps to ensure that the use of hydrogen increases exponentially.

The EU is seeking to have 6 gigawatts of “green hydrogen electrolyser capacity by 2024.” Although a recent report predicted that the bloc would miss that target, it’s clearly trying to tremendously boost the production and use of green hydrogen.

Politico added that “Expanding hydrogen use is a central plank in Brussels’s Green Deal to reach the EU’s climate neutrality goal by mid-century.

In the U.S., the White House is a big backer of green hydrogen, with an adviser calling it “a big player in both the manufacturing and the heavy-duty vehicle sector right away,” And in Congress, Democrats are looking to appropriate $9.5 billion to build hydrogen infrastructure in the U.S.

Across the world, South Korea and Australia are big believers in hydrogen. In addition to the joint ventures that South Korea’s SK has launched with Plug Power, another of the country’s large firms is reportedly running the biggest hydrogen power plant in the world.

Meanwhile, SK has agreed to build a hydrogen plant with a firm called Monolith, which has developed a system to convert natural gas into hydrogen without emitting carbon dioxide. And South Korea and the Persian Gulf nation of Qatar have agreed to partner on the development of hydrogen.

Turning to Australia, the country “has over 80 hydrogen projects planned,” and a government company recently predicted that hydrogen developed using entirely renewable energy would become cheaper than hydrogen produced with natural gas around 2030.

The Bottom Line on PLUG Stock

The combination of Plug’s impressive partnerships in the U.S., Europe and South Korea, along with strong government support for the expansion of hydrogen in all of those countries, should tremendously bo0st the company’s sales and profits within the next year.

Additionally, by the end of 2022, the company’s partnership with Airbus is likely to begin bearing some fruit. In other words, by then, the companies should be able to announce some technological advancements and perhaps even unveil a prototype of a plane that can run on hydrogen.

PLUG stock currently trades at roughly 24 times analysts’ average 2022 sales estimate for the company. Plug Power expects to generate $3 billion of sales in 2025.

Given the increased excitement about the company’s projects in particular and hydrogen in general that’s likely to take hold among investors by the end of 2022, I think that the shares will trade at 15 times the company’s 2025 sales estimate by then.

Everything else being equal, that would result in a market capitalization of $45 billion, or more than double its current market capitalization of $21.4 billion.

On the date of publication, Larry Ramer held a long position in PLUG stock.

Larry Ramer has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Plug Power. You can reach him on StockTwits at @larryramer. 

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