In late June, yours truly here suggested the world was finally ready for hydrogen-powered electricity solutions provided by the likes of Plug Power (NASDAQ:PLUG). As such, PLUG stock may have finally become a worthy bet. The fact that Plug Power stock made a major low that day and rallied through the early part of July underscored the idea.
Since then, despite topping last quarter’s earnings and revenue expectations (both of which were improved year-over-year), the PLUG stock price has moved to even lower lows.
As of right now, shares are under their pivotal 200-day moving average line that has acted as support the day of my previous look.
I’m going to stick with my thesis though, on faith that a sweeping, marketwide meltdown won’t materialize and completely undermine Plug Power stock. The company’s still got too many catalysts cued up for later this year.
Plug Power Is Getting the Job Done
I was wrong about Plug Power’s acquisition of Canadian company EnergyOr being one of the four major announcements the company had in store for the year. Becoming a supplier of engines for 100 DHL delivery trucks is still one of the four, but CEO Andy Marsh explained in the second quarter’s letter to shareholders there are still three more developments that have yet to be revealed.
It’s not clear if Thursday’s press event counts as one of the other three. It probably doesn’t, though it’s certainly a noteworthy development.
The press event in question is taking place at Plug Power’s headquarters in Latham, New York, but the purpose is to showcase the success of the company’s pilot program with Albany International Airport. In February, the airport replaced many of its luggage-handling vehicles with fuel cell-powered versions. Undoubtedly the event will serve as validation of the idea of liquid hydrogen fuel cells.
All told, the company has sold more than 28,000 fuel cells since its inception, with 2000 of them being delivered last quarter.
For perspective on that pace, last quarter’s revenue of $57.1 million was up 43% from the year-earlier figure of $39.9 million. The loss was whittled down from twelve cents per share of PLUG stock to only eight cents.
Investors Waiting on More Evidence
There’s little not to like.
Although still in the red and expected to be for at least a couple more years, the company’s current fiscal trajectory could put it in the black by 2022. Investors have been more bullish on stocks with weaker prospects.
The impasse is arguably a lingering lack of awareness regarding hydrogen fuel cells and their potential. They’re seemingly too good to be true, only generating heat and water when they produce electricity.
To that end, ironically, there’s a downside that makes the premise of hydrogen fuel cells all too real. Their drawbacks include their expense, and the difficulty in storing and transporting hydrogen.
They can also be dangerous; liquid hydrogen also serves as rocket fuel. On balance, however, hydrogen has proven to be an effective alternative. Not only is it renewable, but it’s also about twice as efficient as burning fuel in a traditional combustion engine.
As is the case with all new technologies though, time is quelling the uncertainty. The fuel cell market is expected to grow in excess of 20% per year through 2026.
And Plug Power has gotten very, very good at serving as one of the growing fuel cell industry’s key influencers, positioning itself as a category leader of a group that includes a bigger (as measured by market cap) Ballard Power Systems (NASDAQ:BLDP) and a smaller Hydrogenics (NASDAQ:HYGS).
Events like the one scheduled for September in Latham create that much-needed spectacle the hydrogen fuel cell premise needs. They may not create the same kind of buzz Apple (NASDAQ:AAPL) is capable of creating at its unveiling events, but for the sliver of consumers and corporations that care about alternative energies, such events draw clear attention to the company.
If nothing else, current and would-be owners of PLUG stock are amped up in anticipation of what the long-teased “other three” announcements will be.
Bottom Line on PLUG Stock
While the backstory is right, that won’t necessarily put or keep Plug Power stock in an uptrend.
Blame the market environment more than anything else right now. When fears of a recession are at their most frenzied, investors don’t want to own much of anything. They’re particularly unwilling to take chances on still-new technologies in that scenario. Plug Power also lacks the size that translates into solidness in many investors’ minds.
Nevertheless, hydrogen fuel cells work. Plug Power is making them a legitimate alternative. It took solar and even wind power years and years to reach true, fiscal viability.
If nothing else, PLUG stock has earned a spot on your long-term watchlist at least through next month when its publicity event will include another big announcement.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.
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