A Not-So-Obvious Plug?

Do you read Barron's? If so, please email me immediately and tell me what stocks you're buying. I want to stay as far away from them as possible.

No offense to Barron's or its publisher, Dow Jones (NYSE: DJ  ) , of course. After all, this quality Wall Street Journal publication is usually worth reading. But whatever the thoroughness of the reporting or the literary genius of the writers, Barron's readers appear to be a couple of D batteries short of a fully charged flashlight.

I refer, of course, to this week's now infamous Barron'spiece (subscription required) on hydrogen fuel cell star Plug Power (Nasdaq: PLUG  ) -- the article that triggered a nearly 13% nosedive in the company's stock yesterday. Among other things, the article pointed out that there are plenty of alternatives to fuel cells; that if Plug wants to become profitable, it needs to sell way more units than it's currently moving; and that Plug's stock appears to be expensive, given that the company is profitless now and looks to remain that way for the foreseeable future.

Well, duh. This isn't exactly groundbreaking news, people. We at the Fool have been saying the same things for more than a year now. Fools can't help noticing that Plug's revenue growth has been anemic and that the company's "cost of revenues" usually exceeds the revenues themselves.

We've further observed that Plug makes twice the sales from government research-and-development contracts as it makes from commercial sales of fuel cell units. So it's true that the units aren't exactly flying off the shelves over in Latham, N.Y.

And because we're investors writing for investors, we've warned our readers that if this company is going to have a shot at turning a profit someday, it needs to sell stock and dilute existing shares regularly so that a share bought today will almost certainly represent a tinier level of ownership in the company a few years from now.

Nothing against Plug. We hold the same skepticism, by and large, for Plug's fellow travelers in the hydrogen dream -- Ballard (Nasdaq: BLDP  ) , FuelCell (Nasdaq: FCEL  ) , Millennium Cell (Nasdaq: MCEL  ) -- as investments. As companies, we cheer them all on in their quest for cheap, clean, renewable sources of energy to eventually free us from the petroleum tar pit. But as investors, we're compelled to point out the risks involved in buying these companies' shares.

If Plug investors had been paying attention, perhaps the Barron's article wouldn't have come as such a rude shock. Perhaps, indeed, those investors wouldn't be nursing that 12.6% beating this morning.

Learn more about Plug's Rule Breaking technology on our very own Fool boards, populated by individual investors like you -- Fools well-versed in the details of fuel cells and happy to share their insights. You can find them at the Fuel Cells & Alternative Energy and Fuel Cell Primer boards.

Fool contributor Rich Smith has no financial interest in any of the companies mentioned in this article.