Ballard Power Systems (NASDAQ:BLDP), one of the few opportunities for those looking to a fuel-cell-powered future, has been a shocking surprise for investors so far in 2020.

While the S&P 500 has dipped 6% since the start of the year, shares of Ballard have soared nearly 45%, extending the impressive run that the stock had through 2019. In addition to the stock's performance, the company itself has recently electrified investors' hopes as it reported a company-best Q1 performance, generating revenue of $24 million.

As the market continues to recover from its recent downturn, many investors with long-term horizons are seeking growth stocks at bargain prices. Although Ballard certainly qualifies as a growth stock, its recent run may suggest to some that it's too late to pick up shares at a compelling price. Let's examine this leading alternative-energy stock in more detail to see if it's right for you. 

Hand-drawn question marks over a woman's head.

Image source: Getty Images.

Ballard's bulls are betting that...

With more than 40 years of developing fuel cells under its belt, Ballard will continue to benefit from the global push toward decarbonizing transportation, according to its most ardent supporters. While the company has exposure to several markets, it's primarily the heavy-duty motive market (bus, rail, truck, and marine applications) where the company has had its greatest successes.

In particular, optimists have high hopes that the company's joint venture with Weichai Power in China, where the government is targeting 20% of vehicles to be powered by alternative energy by 2025, will spur the company's success. Providing hope for investors concerned about the COVID-19 outbreak, management reported during its Q1 earnings presentation that it remains confident that commissioning of assembly lines at the joint venture factory will begin in the middle of 2020.

Those who believe that Ballard's glass is half full will point to strides the company is making in Europe as well. Since the start of 2020, it has received orders for 45 motive modules to power buses in Germany and The Netherlands. And for long-term opportunities, management has its sights set on California. On the Q1 conference call, CEO Randy MacEwen noted that the California Air Resources Board is requiring public transit agencies over the next 20 years to transition to 100% zero-emission bus fleets.

But bears believe...

Management said on the conference call that the company is "not seeing any demand pullback as a result of COVID-19. In fact, we're experiencing high levels of quoting activity." But skeptics are taking the auspicious outlook with a grain of salt. At the end of 2019, Ballard had forecast 2020 revenue of $130 million, but has subsequently withdrawn that guidance in light of the pandemic.

Furthermore, bears will point to the company's shrinking backlog as a concrete indication of its financial woes. Ballard's order backlog of $169.5 million at the end of Q1 2020 was down from $178.7 million at the end of the previous quarter and was a 10% year-over-year drop from the $188.4 million backlog at the end of Q1 2019.

Digging deeper into the financials, Ballard's critics will point to the company's history of failing to generate profits or positive cash flow.

BLDP Revenue (Annual) Chart

BLDP Revenue (Annual) data by YCharts.

Over the past 10 years, the company has made progress in growing sales, but it has consistently demonstrated the inability to translate that sales growth into profits. Granted, the company has achieved some success in proving the value of its fuel-cell solutions to customers, but it hasn't succeeded in demonstrating that it can be a lucrative endeavor. Management may have an auspicious outlook, but the company's detractors won't change their minds as long as it continues to report a net loss.

Too much risk hangs on this hydrogen hopeful

Since Ballard doesn't generate profits or positive cash flow, traditional valuation metrics aren't helpful in assessing the stock's price tag. It trades at 21.2 times sales -- considerably richer than its five-year average multiple of 6.8 and the S&P 500's current ratio of 2.1. Between that price tag and the company's troublesome inability to generate profits, the stock seems unappealing at this time. Only investors with a significant tolerance for risk should consider a position.

It will be interesting to follow Ballard's progress as the global energy landscape continues to evolve. In particular, investors can look for an update regarding China's New Energy Vehicle policy on fuel cell vehicles in the coming months. Should the government reduce the subsidies for such vehicles, it would deal a heavy blow to a company already on shaky ground.