Fuel cell stocks have been attracting a lot of interest from retail investors lately.
With different unfavorable weather events affecting the earth’s climate, a lot of focus is being put on renewable energy. Accordingly, there appears to be a lot of optimism surrounding green energy plays, such as Plug Power (PLUG).
This Latham-based company has become the magnum opus of the hydrogen economy. Those seeking hyper-growth stocks have done well to hold onto shares of PLUG stock over the long term.
That said, PLUG stock hasn’t performed all that well this year. After hitting a peak of more than $75 in January, Plug Power saw its valuation cut by two-thirds, as growth investors looked elsewhere.
I’m neutral on this stock. That said, let’s dive into some reasons why Plug Power may be enticing to investors at these levels. (See Plug Power stock charts on TipRanks)
Key Catalyst in Place for PLUG Stock
Perhaps the biggest catalysts investors in PLUG stock are watching right now is President Joe Biden’s upcoming infrastructure bill. This spending bill includes investments in the green energy space, which would directly impact green hydrogen-related stocks.
House Speaker Nancy Pelosi has been pushing a vote on this infrastructure bill in recent days. Should this vote pass, there’s a potential near-term catalyst for PLUG stock that investors will want to keep an eye on.
Earlier this week, PLUG stock surged on news that a vote was being pushed sooner. However, since then, shares of Plug Power have come back to earth.
This indicates that the market remains mixed as to whether this bill will get passed, and if so, what sort of funding would be available that benefits companies like Plug Power.
Plug Power’s Production Capacity
Another catalyst investors have an eye on is Plug Power’s capital spending plans. The company recently announced it would be investing a total of $84 million into its latest hydrogen production facility in Georgia. This new plant will produce roughly 15 tons of liquid hydrogen every day.
The facility will utilize only renewable energy to produce liquid hydrogen. Besides this new plant, Plug Power has similar facilities in New York, Pennsylvania, and Tennessee.
Plug Power’s Cash Flow Position
In the recent run-up in PLUG stock earlier this year, Plug Power’s management team was diligently raising capital. During this surge, the company raised nearly $3 billion in cash via three separate stock offerings.
These prudent moves may have hurt shareholders in the immediate term, diluting existing shareholders. However, for those looking at this stock from a fundamentals standpoint, it’s easy to argue that this company’s balance sheet is in much better shape today.
Plug Power’s cash hoard has become a source of strength for this stock in its bid to build out America’s green hydrogen infrastructure. Accordingly, investors looking for the leading player in this space have gravitated toward Plug Power, a company with the deep pockets necessary to make such investments.
Wall Street’s Take
As per TipRanks’ analyst rating consensus, Plug Power is a Moderate Buy. Out of 15 analyst ratings, there are 12 Buy recommendations, two Hold recommendations, and one Sell recommendation.
The average Plug Power price target is $41.14. Analyst price targets range from a high of $78 per share, to a low of $27 per share.
Bottom Line
With the global economy switching towards renewable energy, long-term investors have enough reason to like PLUG Stock. Indeed, if hydrogen fuel cells can succeed in the future, shares of this company can generate substantial returns.
That said, this is a company that has also shown it’s prone to sector-specific (and market-related) sell-offs. Accordingly, investors should be aware of the risk/reward with this stock before jumping in.
Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article
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