For kids who aren't able to figure out for themselves that Santa Claus, the Tooth Fairy, and Superman aren't real, the truth comes as a nasty shock. Those of us at The Motley Fool who write skeptical opinions on alternative-energy plays have come to expect the same sort of reaction from the sector's true believers. With that in mind, I'll give FuelCellEnergy
Second-quarter results weren't too surprising -- or especially relevant, for that matter. Like a biotech company with products still early in development, FuelCell is a long way from proving itself profitable. In the meantime, the 50%-plus boost in revenue (and near-doubling of product revenue) is nice, but when you lose money on every unit, you don't really make up for it with volume. And as fellow Fool Rich Smith warned, the company's dilution of common stockholders continues apace.
Perhaps FuelCell will figure a way to make this all work, but I'm not betting on it. The company is targeting large-scale power applications, and the economics will be tough for the company to surmount. Incumbent generation technology seems to cost about $300 to $500 per kilowatt, while even optimistic assessments of molten carbonate generation (at commercial volumes) look to cost around $1,500 per kilowatt.
But wait, you say, what about the environmental aspects? Well, FuelCell's fuel cells still need natural gas to operate. What's more, companies like Evergreen Solar
There's nothing wrong with taking a flyer on a risky idea, but FuelCell wouldn't be my pick. Heck, even companies like Eaton
For more energetic Foolishness:
Looking for more promising companies banking on high technology? Check out the cutting-edge lineup at David Gardner's market-beating Motley Fool Rule Breakers newsletter service. You can see all of David's picks, and swap ideas with fellow future-focused Fools, with a free 30-day guest pass.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).