What happened
While many stocks are rising and falling today due to the reports of quarterly earnings, this isn't the case with fuel cell stocks Plug Power (PLUG 2.49%), Ballard Power Systems (BLDP 1.03%), and Bloom Energy (BE 1.69%). Instead, investors are choosing to pick up shares of these hydrogen stocks in response to the escalating military conflict between Russia and Ukraine, and some bullish commentary from Wall Street.
As of 10:37 a.m. ET, shares of Plug Power, Ballard Power Systems, and Bloom Energy are up 12.2%, 13.7%, and 14.3%, respectively.
NASDAQ: PLUG
Key Data Points
So what
With geopolitical tensions running extremely high, energy prices are jumping. Futures for West Texas Intermediate, the U.S. benchmark, are up 4.5%, and Brent crude futures have exceeded $100 per barrel. It's unsurprising, therefore, that investors are turning to fuel cell stocks since their hydrogen power offering represents an alternative to oil. Plug Power, for example, is making a concerted effort to expand beyond its previous core competency of providing fuel cell solutions for material handling equipment. In fact, it has set a daily green hydrogen production target of 500 tons by 2025 in the United States, expanding to global daily production of 1,000 tons by 2028.
Ballard, although not intent like producing green hydrogen like Plug Power, also is positioning itself to prosper as the hydrogen economy grows. Earlier this month, the company announced that it successfully tested a liquid hydrogen-powered fuel cell with its partner Chart Industries -- a notable feat considering that liquid hydrogen has certain benefits over gaseous hydrogen such as better range and space abilities.
Image source: Getty Images.
Regarding Bloom Energy, there's another catalyst behind the stock's pop today: attention from Wall Street. Biju Perincheril, an analyst at Susquehana, upgraded Bloom Energy to positive from neutral and raised the price target to $33 from $18, according to The Fly, which reported that Perincheril "believes the current escalation in geopolitical risks should provide a boost for hydrogen adoption, especially in Europe and other import-dependent markets."
Now what
Although it's understandable why investors are turning to fuel cell stocks today, it's important to recognize that the market's embracing of Plug Power, Ballard Power Systems, and Bloom Energy isn't predicated on fundamental improvements to the underlying businesses. Consequently, these stocks shouldn't be recognized as conservative approaches to mitigating the risk of escalating oil prices. Should the conflict in Eastern Europe continue, it wouldn't be surprising if fuel cell stocks continue to climb; however, it's also likely that an easing of tensions would result in investors eschewing fuel cell stocks. Therefore, those looking to shore up their portfolios with more robust businesses that offer exposure to the renewable energy industry will want to look elsewhere.
