Integrated fuel cell company FuelCell Energy, Inc. (FCEL), which is based in Danbury, Conn., manufactures fuel cell technology platforms for power generation. The company’s revenue for its fiscal third quarter, ended July 31, 2021, increased 43.3% year-over-year to $26.80 million. Its gross profit came in at $1.10 million, compared to a $3.12 million loss in the year-ago period. Also, its shares have gained 33% in price over the past three months to close yesterday’s trading session at $7.61.
However, FCEL is currently trading 74.1% below its 52-week high of $29.44, which it hit on February 10, 2021. The stock soared in price after the $1 trillion-plus bi-partisan infrastructure bill was passed, which is expected to boost the demand for fuel cell power plants. However, Wall Street analysts expect the stock to hit $7.33 in the near term, indicating a potential 3.7% decline. The stock looks overvalued at the current price level. In terms of forward EV/S and P/S, FCEL’s respective 31.84x and 36.26x are higher than the 2.01x and 1.65x industry averages. In addition, its 11.53x forward P/B is 284.8% higher than the 3x industry average. So, the we think stock is best avoided now.
Even though hydrogen-fuel infrastructure is in its early stages of development, the industry is expected to witness significant growth in the long run, with governments moving to decarbonize fuel and promote clean energy usage. According to a BlueWeave Consulting report, the global green hydrogen market is expected to reach $6.84 billion by 2027, growing at a 57.7% CAGR. So instead of betting on FCEL, we think it could be wise to add hydrogen stocks Cummins Inc. (CMI), Plug Power Inc. (PLUG), and Ballard Power Systems Inc. (BLDP) to one’s watch list now. Wall Street analysts expect these stocks to soar more than 20% in price in the near term.
Cummins Inc. (CMI)
Columbus, Ind.-based CMI designs, manufactures, distributes, and services diesel and natural gas, electric and hybrid powertrains, and related components. The company operates in the engine; distribution; components; power systems; and new power segments. Its new power segment designs and manufactures hydrogen production solutions.
On December 1, 2021, CMI unveiled its Hydrogen Fuel Cell Powertrain Integration Center in West Sacramento, Calif. “We’re investing heavily in alternative power solutions, particularly hydrogen fuel cells, batteries, and electric drivetrains,” according to CMI’s VP of Fuel Cell and Hydrogen Technologies. The company’s Proton Exchange Membrane (PEM) fuel cell technology will likely power heavy, long-haul trucks. So, this initiative could help boost the company’s revenue.
CMI’s revenue for the fiscal third quarter, ended October 3, 2021, increased 16.6% year-over-year to $5.96 billion. The company’s net income increased 6.5% year-over-year to $534 million. Also, its EPS came in at $3.69, up 9.8% year-over-year.
CMI’s EPS and revenue for its fiscal 2021 are expected to increase 25.5% and 21.1%, respectively, year-over-year to $15.13 and $23.99 billion It has surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has plunged 7.2% in price over the past month to close yesterday’s trading session at $220.81. However, Wall Street analysts expect the stock to hit $282.43 in the near term, indicating a potential 27.9% upside.
Plug Power Inc. (PLUG)
PLUG is focused on proton exchange membrane, fuel cell and fuel processing technologies, fuel cell/battery hybrid technologies, and associated hydrogen and green hydrogen generation, storage, and dispensing infrastructure. The Latham, N.Y-based company provides end-to-end clean hydrogen and zero-emission fuel cell solutions for supply chain and logistics applications, on-road electric vehicles, and the stationary power market.
On November 23, 2021, PLUG acquired Applied Cryo Technologies, Inc., which provides technology, equipment, and services for transporting, storing, and distributing liquefied hydrogen and other cryogenic gases. The acquisition is expected to help the company advance its green hydrogen infrastructure and logistics network development.
For its fiscal third quarter, ended September 30, 2021, PLUG’s revenue increased 34% year-over-year to $143.92 million. In addition, the company’s net cash provided by financing activities for the nine months ended September 30, 2021, increased 506.8% year-over-year to $3.58 billion.
Analysts expect PLUG’s EPS for the quarter ending December 31, 2021, to increase 91.1% year-over-year to $0.10. Its revenue for the quarter ending March 31, 2022, is expected to increase 103.7% year-over-year to $150.16 million. Over the past month, the stock has lost 10.6% in price to close yesterday’s trading session at $36.60. However, Wall Street analysts expect the stock to hit $48.29 in the near term, indicating a potential 32% upside.
Ballard Power Systems Inc. (BLDP)
Headquartered in Canada, BLDP designs, develops, manufactures, sells, and services proton exchange membrane fuel cell products for medium- and heavy-duty vehicles. The company is focused on the power product markets of heavy-duty motive, material handling, backup power, and the delivery of technology solutions.
In November 2021, BLDP acquired Arcola Energy, which specializes in hydrogen fuel cell powertrain and vehicle systems integration. BLDP’s President and CEO, Randy MacEwen, said, “With the acquisition of Arcola, we will make it easier for existing and new OEM customers globally to offer FCEVs by providing stronger support for the integration of our fuel cell engines into their vehicle platforms, including powertrain integration, vehicle integration and application engineering.”
BLDP’s revenue from material handling for its fiscal third quarter, ended September 30, 2021, increased 120% year-over-year to $3.10 million. The company’s revenue from the backup power segment increased 90% year-over-year to $1.90 million. In addition, its cash reserves increased 238% year-over-year to $1.22 billion.
For its fiscal year 2022, analysts expect BLDP’s EPS and revenue to increase 24% and 40.6%, respectively, year-over-year to $0.19 and $144.97 million. The stock has plunged 25.3% in price over the last month to close yesterday’s trading session at $14.45. However, Wall Street analysts expect the stock to hit $17.90 in the near term, indicating a potential 24% upside.
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CMI shares were trading at $218.17 per share on Thursday morning, down $2.64 (-1.20%). Year-to-date, CMI has declined -1.67%, versus a 26.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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