Please ensure Javascript is enabled for purposes of website accessibility

Why Bloom Energy and Plug Power Stocks Are Up -- but FuelCell and Ballard Are Down

By Rich Smith - Apr 20, 2021 at 4:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

New Wells Fargo ratings weigh on the fuel-cell industry.

What happened

Shares of hydrogen fuel-cell stock Plug Power (PLUG 3.68%) are up 1.7% in 10:30 a.m. EDT trading Tuesday, while rival Bloom Energy (BE 2.30%) is enjoying a more substantial 3.1% gain after rising more than 6% earlier in the day. Elsewhere in the fuel-cell industry, things aren't going so well, with both Ballard Power (BLDP 1.75%) and FuelCell Energy (FCEL 0.80%) stocks sinking.

You can blame Wells Fargo for that.

Red arrow up, green arrow down on yellow background

Image source: Getty Images.

So what

In a series of new stock ratings, investment bank Wells Fargo announced last night that it has started covering Bloom Energy with an overweight rating -- hence, its relative outperformance today. Plug Power skated by with an equal weight rating that, combined with a more positive outperform from Evercore ISI, is helping keep Plug's head above water, as well. On the other hand, Wells tagged FuelCell Energy with its dreaded underweight rating (i.e. sell).

Rounding out the list, Wells called Ballard an equal weight stock.

Now what

As TheFly.com reports today, Wells Fargo believes Bloom Energy is the best bet in the fuel-cell industry, boasting an "established market presence," "visible growth trajectory," and "multiple avenues for future growth" -- but only if the company is able to succeed in its plans to produce hydrogen gas for fuel-cell use, This is a venture that's far from certain to succeed inasmuch as Plug Power has the first-mover advantage.

Wells sees similar advantages at Plug and Ballard, by the way. The main problem there is that the analyst believes Plug's pole position in the fuel-cell industry, at large, and Ballard's leading position in producing fuel cells to operate municipal buses are already fully reflected in the stocks' market capitalizations -- $14.7 billion and $5.7 billion, respectively. Both of these are higher than Bloom's $3.8 billion.

But even a (relatively) cheap stock price is no guarantee of a good investment. As Wells points out, FuelCell energy lags its competitors in commercialization. Given its rivals' advantages, Wells "struggles" to see a reason to own that stock when the prospects for the others look so much better.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bloom Energy Corporation Stock Quote
Bloom Energy Corporation
BE
$16.88 (2.30%) $0.38
FuelCell Energy, Inc. Stock Quote
FuelCell Energy, Inc.
FCEL
$3.78 (0.80%) $0.03
Ballard Power Systems Inc. Stock Quote
Ballard Power Systems Inc.
BLDP
$6.41 (1.75%) $0.11
Plug Power Inc. Stock Quote
Plug Power Inc.
PLUG
$17.18 (3.68%) $0.61

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.