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Why Plug Power, FuelCell Energy, and Ballard Power Systems Stocks All Jumped Today

By Howard Smith - Updated Mar 10, 2021 at 12:35PM

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New business announcements and a dip in the sector have been driving a recovery in hydrogen fuel stocks.

What happened

It has been a rough few weeks for the tech sector and alternative energy stocks. But after monthly declines of up to 50% through last week in some cases, investors are warming back up to renewable energy names. 

That rebound continues today as shares of fuel cell companies including Plug Power (PLUG 8.25%), FuelCell Energy (FCEL 9.64%), and Ballard Power Systems (BLDP 6.99%) jumped double digits early in Wednesday's trading. As of 11:20 a.m. EST, shares had pared gains, with Plug Power up 3.8%, FuelCell Energy up 8.3%, and Ballard Power up 3.7%.

So what

The recent rotation out of growth and into more value-oriented names has provided some investors an opportunity to pick up richly valued companies at lower share prices. Even with today's bump, over the last month, shares in Plug Power, FuelCell Energy, and Ballard Power are off 37%, 43%, and 42%, respectively. 

hydrogen fuel at truck stop

Image source: Getty Images.

The hydrogen fuel cell industry is still in its infancy, but these businesses have announced several strategic advancements recently. Ballard Power, for example, said yesterday that Canadian Pacific Railway (CP 2.34%) will be buying Ballard fuel cell modules for its hydrogen locomotive program. Each module will supply 1.2 megawatts (MW) of electricity to power a locomotive.

Now what

CP is working to develop North America's first hydrogen-powered line-haul freight locomotive by retrofitting a formerly diesel-powered locomotive with Ballard hydrogen fuel cells. Yesterday, Ballard announced an order for 50 fuel cell modules from a Northern Ireland-based customer to power fuel cell electric buses (FCEBs) in several U.K. cities. That doubles the initial order announced in the middle of last year. 

Plug Power has recently announced plans to build North America's largest green-hydrogen generation plant to serve the Northeast, using hydropower to make the hydrogen. It separately said it is expanding a partnership with hydrogen aviation company Universal Hydrogen, which wants to retrofit existing regional airplanes with hydrogen-electric powertrains. The relationship with Universal Hydrogen also aims to "see green hydrogen become cost-competitive with jet fuel by 2025," according to a joint statement. 

The smallest of these companies, FuelCell Energy has said it is focusing its fuel cell technology on distributed generation, distributed hydrogen, long-duration hydrogen energy storage, and power generation as well as electrolysis. 

Investors who want a piece of the potential future of hydrogen fuel technologies have been buying into these companies over the past year. These are speculative investments, as the road to profitability is still long. But the recent dip gave some long-term investors a chance to add an aggressive name to a portfolio. The underlying business growth will determine if today's shares are priced for future growth

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Stocks Mentioned

Plug Power Inc. Stock Quote
Plug Power Inc.
$17.06 (8.25%) $1.30
Canadian Pacific Railway Stock Quote
Canadian Pacific Railway
$69.99 (2.34%) $1.60
FuelCell Energy, Inc. Stock Quote
FuelCell Energy, Inc.
$3.98 (9.64%) $0.35
Ballard Power Systems Inc. Stock Quote
Ballard Power Systems Inc.
$7.35 (6.99%) $0.48

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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