The last year has seen significant investor interest in the clean energy industry, and governments globally have announced or commenced initiatives to address climate change concerns. Indeed, the global fuel cell market witnessed approximately 14% growth in 2020. And given rising demand for fuel cell equipment worldwide, the market is expected to grow at a 36% CAGR 2021 through 2028.

With President Biden’s willingness to spend heavily to contribute to building a clean-energy-based future for the U.S., along with similar initiatives by the governments of the major economies, the long-term prospects for the clean energy industry look bright. However, investors’ current rotation away from the clean energy and technology industries to cyclical industries to capitalize on the presumptive economic recovery is driving a sell-off in  hydrogen fuel cell stocks.

While the recent sell-off offers good entry opportunities in some of the fundamentally sound clean energy stocks, not all stocks are well positioned to capitalize on the industry’s growth prospects. Plug Power, Inc. (PLUG) and Bloom Energy Corporation (BE) do not possess sufficient fundamental strength to rebound in the near term, in our view.  So, we think it’s wise to avoid these stocks now.

Plug Power, Inc. (PLUG)

A leading provider of clean hydrogen and zero-emission fuel cells, PLUG provides hydrogen fuel cell turnkey solutions for the electric mobility and stationary power markets. It has revolutionized the material handling industry with its full-service GenKey solution, which is designed to increase productivity, lower operating costs and reduce carbon footprints in a reliable and cost-effective way. It also provides scalable, modular PEM fuel cell power to support the backup and grid-support power requirements of the telecommunications, transportation and utility sectors.

PLUG’s revenue for the fourth quarter ended December 31, 2020 was  negative $316.34 million. Its gross loss for the quarter was $422.66 million compared to a gross profit of $12.78 million for the prior-year period. The company’s net loss came in at $476.17 million, while its loss per share came in at $1.12. Analysts expect PLUG’s EPS to decline 133.3% for the quarter ending June 30, 2021.

A securities fraud class action lawsuit has been filed against PLUG by the law firm Kessler Topaz Meltzer on behalf of investors who purchased or acquired PLUG’s securities between November 9, 2020 and March 1, 2021. The plaintiffs  alleged that the company failed to disclose several facts, such as that it would be unable to  file its 2020 annual report in a timely way due to delays related to the review of classification of certain costs and the recoverability of the right to use assets with certain leases. The lawsuit has placed PLUG  in bad light, and its stock has lost 19.7% year-to-date, closing Friday’s trading session at $27.24.

PLUG’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

The stock has an F grade for Value, and Sentiment, and a D Grade for Growth, Stability, and Quality. Click here to access PLUG’s ratings for Momentum as well.

PLUG is ranked #88 of 90 stocks in the Industrial-Equipment industry.

Bloom Energy Corporation (BE)

Founded in 2001, BE provides solid oxide fuel cell technology. It offers Bloom Energy Server, which is a solid oxide fuel cell technology energy server that produces electricity at the customer’s site. The company serves a wide range of industries, including banking and financial services, cloud services, technology and data centers, communications and media, government, healthcare, retail, and utilities.

BE’s loss from operations was  $4.52 million for the fourth quarter, ended December 31, 2020. The company’s net loss came in at $27.14 million for the quarter. Its non-GAAP loss per share was  $0.08 compared to $0.04 loss per share in the third quarter of fiscal 2020. Its EPS is expected to remain negative in fiscal 2021.

The stock has lost 13.7% so far this year to close Friday’s trading session at $24.73.

BE’s poor prospects are apparent in its POWR Ratings also. The stock has an overall D rating, which equates to Strong Sell in our proprietary rating system. It has a D grade for Stability, Sentiment, Value, and Quality as well. Click here to see the additional ratings for BE (Momentum and Growth).

BE is ranked #74 in the same industry.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

Click here to check out our Industrial Sector Report for 2021

PLUG shares were trading at $25.17 per share on Monday afternoon, down $2.07 (-7.60%). Year-to-date, PLUG has declined -25.77%, versus a 11.18% rise in the benchmark S&P 500 index during the same period.

About the Author: Ananyo Guha Niyogi

Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...

More Resources for the Stocks in this Article