Why You Should Avoid Plug Power

On Tuesday's Market Foolery, host Chris Hill and Motley Fool Special Ops analyst, Tom Jacobs, look at diversified portfolios after exploring the shocks investors can find in the Energy market.

Shares of Plug Power  (NASDAQ: PLUG  )  were up yesterday, and, as Chris explains, the stock is up after nothing more than new coverage from FBR Capital Markets, which rated the company as an "outperform" with a price target in the next twelve months of $8 a share. Chris then looks at the stock from a year ago and back in March which paints a pretty chaotic picture. Although Chris doesn't have energy in his portfolio, he sees Plug Power as a scary option. Additionally, Tom describes the landscape in the early 2000's when fuel cells were the next big thing with Ballard Power, FuelCell Energy, and Plug Power coming to the front. Where are they today, he asks? Unprofitable. Chris asks where Tom is directed in the Energy industry and Tom looks at natural gas, but he thinks that investing in natural gas is risky.

Chris then turns the conversation to diversified portfolios and asks if Tom believes that investors need Energy in their portfolio. Tom explores his method, a Warren Buffett method, of building out a portfolio.

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Read/Post Comments (4) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On July 16, 2014, at 3:48 PM, Demokrat wrote:

    Ask yourselves what you two know more so than the half dozen rating agencies' analysts that project that this is heading to 6$ +.

    I don't own PLUG but I know enough to consider that if they are good enough for Walmart they might be good enough for others. I'm open to the idea that they might have a fuel cell powered battery for forklifts that might accomodate Costco, Home Depot, and others.

    You mock Plug but you never have a bad word to say about the analysts and the agencies that give these ratings.

    Why?

    Some would suggest that it is because you have a hidden agenda to see Plug go lower as shorts.

    It will be of little consequence to me but it seems that that lack of disclosure is a concern.

  • Report this Comment On July 16, 2014, at 3:54 PM, Demokrat wrote:

    In a passing note, you two might not own shares short in Plug Power but the word out on the street is writers at Motley Fool and Seeking Alpha bash companies for the sake of their employers. It would seem that both require some means of generating revenue. Long in some cases, short in others.

  • Report this Comment On July 16, 2014, at 4:03 PM, Demokrat wrote:

    Lest I forget, why suggest that Plug is up on "nothing more than new coverage" when it is self explanatory that they also have an outperform rating with an $8 price target?

    If you gentlemen take a step back you might more clearly see how you contradict yourselves.

    What publicly traded company would not react positively when given an outperform rating and a 100% return price target?

    Most likely a public company trading on Superman's backward opposite to Earth, Bizarro World.

  • Report this Comment On July 16, 2014, at 5:04 PM, pchandl wrote:

    Why You Should Own Plug Power....

    Is PLUG a risky investment? my answer is yes, but is there any investment in the stock market universe that isn't risky?

    Has PLUG demonstrated that it has a product and service that is in demand? My answer is yes. Are it's customers world class participants playing in a broader market than PLUG's market? My answer is yes. Has PLUG monetized a technology that meets the need to mitigate a growing worldwide need for clean energy? My answer is yes. Has PLUG demonstrated that its investment in Research & Development is growing its business? My answer is yes. Has Plug been profitable? My answer is No. Will it be profitable in the future? My answer is very likely, yes. Do brick and mortar retail concerns as well as internet retail concerns need to be able to deal more effectively with material handling issues to reduce costs? My answer is yes. Has the need been shown to be growing with world class companies? My answer is yes. Other than the lack of demonstrating profitability in the past is that the only reason not to make an investment in PLUG? My answer is NO. So when you invest in any company you are investing in future growth and past profitability is not the primary metric. AMAZON is a case in point, high growth but no profits that equal its growth.

    The many yes answers made me an investor in PLUG.

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