U.S. Markets closed

Plug Power Skyrockets on Deal Hopes

Zacks Equity Research

The prospect of a large order propelled the shares of Plug Power Inc. (PLUG) higher to $8.48 on March 25 reflecting a gain of 49.03%. Fuel cell, of which Plug Power is a leading proponent, is a niche technology with a huge market potential.

Fuel cells can provide a solution to clean power generation, offsetting the negative impacts of greenhouse gas emissions. The important question is whether this technology will sustain wide uptake for commercial and industrial power generation. For the records, the market reaction was overwhelming when the retail giant Wal-Mart Stores Inc. (WMT) asked Plug Power to supply 1,738 GenDrive fuel cell units recently.

Deal with Automaker

As for the latest buzz, Plug Power’s management only divulged that the potential deal is with a global auto maker. More details are expected to be had in the next couple of weeks. Investors are likely to focus on the deal with the possibility of further share appreciation.

Plug Power’s GenDrive products are well suited for a wide range of forklift and power trucks. In addition, the extensive research done by the company to improve the quality of its products will benefit customers. We believe that this auto deal is just the tip of the iceberg with more such contracts to follow.

Conservative Order Book

Plug Power expects its order bookings for 2014 to be around $150 million. However, within the first three months of the year, the company secured orders worth $60 million. With still nine months to go and another large order in its kitty, Plug Power’s order expectation appears to be a touch conservative.

Others Join the Ride

The positive attributes of fuel cell technology are making fuel cell stocks hot. Like it happened with the Wall-Mart deal, other players in this space are also gaining from a ripple effect. FuelCell Energy Inc. (FCEL) and Ballard Power Systems Inc. (BLDP) registered respective gains of 19.75% and 32.19% yesterday.

Future of Fuel Cell Stocks

Fuel cell technology is here to stay and ongoing investment in research and development will make it more user-friendly and promote rapid uptake. The orders coming in from industry heavyweights will act as a tailwind for fuel cell stocks.

Read the Full Research Report on WMT
Read the Full Research Report on BLDP
Read the Full Research Report on PLUG
Read the Full Research Report on FCEL

Zacks Investment Research