There may not be a small-cap energy stock that's more polarizing than Plug Power Inc (NASDAQ:PLUG), the hydrogen fuel cell specialist with ambitious growth plans. The company is currently a supplier of fuel cells and hydrogen for warehouses and companies doing materials handling and winning major contracts with Wal-Mart Stores and Amazon, along with the hearts of a lot of investors. 

Those two contracts have driven revenue growth for Plug Power, which the market has bought into at times. The one problem is that Plug Power doesn't have a record of making money or turning growth contracts into profitable growth. A history of failing to generate shareholder value is why I won't be buying Plug Power's stock. 

H2 symbol made out of leaves on a floor.

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Plug Power's checkered past

The chart below shows all the reasons for my skepticism in the company in one place. The company consistently loses money, burns cash, and then has to issue shares to stay afloat. 

PLUG Net Income (TTM) Chart

PLUG Net Income (TTM) data by YCharts.

It was early 2014 when Plug power signed the first Wal-Mart contract, so if these deals with major retailers were going to be profitable, we would have seen progress at this point. But as sales to Walmart have ramped up the company has reported single digits, and in some cases negative, gross margins. As a result, cash burn has only gotten worse. 

Management will say that growth from Wal-Mart and Amazon will drive improving financials, but we've heard that story before. Management has been projecting EBITDA breakeven since 2015, something we still haven't seen. 

Growth opportunities are being taken by others

In theory, fuel cells should have a bright future for a lot of applications, starting with materials handling and moving into automobiles, energy storage, and even trucking. But Plug Power isn't a leader in any of those markets. 

Toyota and Honda, among others, are developing their own fuel cell solutions. ITM Power is a leader in hydrogen energy storage. Even in the fuel cell supply space, Ballard Power Systems Inc. (NASDAQ:BLDP) has a much wider number of partnerships and customers than Plug Power's concentrated business. If you want to get exposure to the broader fuel cell market, it would be a better buy. It isn't like Plug Power is the only hydrogen fuel cell game in town. 

Plug Power doesn't have any real differentiation, either

You might think that a fuel cell company like Plug Power would have a long history of developing a differentiated fuel cell product. But Ballard Power Systems was its exclusive fuel cell provider until it bought ReliOn in 2014, a small fuel cell stack manufacturer. 

Outside of its focus on materials handling markets, Plug Power doesn't have a significant differentiation from other fuel cell companies and that will make it tough to generate strong margins in a highly competitive market. 

I'm staying out of Plug Power stock

If you look at Plug Power's stock price over the last five years, you'll see that the price goes up and down depending on the market's mood. Operationally, this is a stock I may think about shorting, but the volatility and surges in the stock on each contract announcement will keep me out of the stock. But long term, this company hasn't shown that it's worth the investment, and without that ability to generate net income and cash flow, I'm staying out of the stock. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.