Last week it was impossible to ignore the sky rocketing price of oil. Driven by increasing demand fueled by Russia’s invasion of Ukraine, oil prices, predictions and stocks were rising. Many Wall Street eyes were on the oil and gas sector as last week ended. However, another industry was also riding a wave spurred by the geopolitical events. The focus on oil has shined a new light on the renewable energy industry, sending fuel cell stocks up. As markets enter a new week, many alternative energy companies are still riding the wave.
What’s Happening With Fuel Cell Stocks
For companies in the alternative energy sector, green is certainly the color today. Bloom Energy (NYSE:BE) is up 10% for the day while Plug Power (NASDAQ:PLUG) has risen by more than 11%. Its peers have demonstrated an even more impressive performance. FuelCell Energy’s (NASDAQ:FCEL) gains have exceeded 12% as of this writing. Ballard Power Systems (NASDAQ:BLDP) is the sector’s winner so far, rising almost 16%.
Why It Matters
The outbreak of a geopolitical crisis may not seem like a reason to double down on fuel cell stocks. However, the sectorwide performance that we have seen from these names recently warrants a closer look.
It is widely known that European nations are heavily dependent on Russia for oil and gas. The U.S. is as well, though to a lesser degree. With crude oil prices surpassing $100 per barrel and European natural gas prices skyrocketing, an energy crisis seems almost imminent. When these types of fears run high, eyes often turn to alternative energy sources.
Fuel cell technology provides the type of solutions that could help nations survive a shortage of oil and gas. Indeed, as the National Geographic reported, “We may soon find ourselves using fuel cells to generate electrical power for all sorts of objects we use every day.”
Countries were making moves toward transitioning to renewable energy sources before the conflict in Ukraine. Since Russian oil exports may soon be compromised, leaders everywhere will have a renewed incentive to embrace and invest in energy alternatives. This could mean a new wave for green energy companies. For the fuel cell producers who were already making significant advances, it means a chance to secure a share of an emerging market.
What It Means
According to a recent report, the U.S. hydrogen fuel cell markets can be expected to surpass $131.06 billion before the end of the decade. It was already expanding before the energy crisis began to overshadow markets. Now that it is clear that countries need to reduce their dependency on Russian oil, incentives to embrace green solutions have never been higher.
Earlier this month, analyst Julien Dumoulin-Smith of Bank of America raised his price target on BE, predicting upside of at least 70%. Since then, the stock has rising closer to his predicted price of $29 per share. Fuel cell stocks across the board have demonstrated excellent numbers since then. This growth trend isn’t likely to stop, even if a ceasefire is reached.
On the date of publication, Samuel O’Brient did not hold (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.
