Tags: Science | Experiment | Stocks | Investor

'Science Experiment' Stocks Lure Investor Money

Monday, 10 Mar 2014 05:29 PM

Fuel-cell manufacturers including Plug Power Inc. that have been the top three Nasdaq gainers in the past month surged Monday ahead of earnings reports this week that are expected to show them on the path toward profitability.

Shares of FuelCell Energy Inc., which was scheduled to release quarterly results later in the day, rose 11 percent to $3.93 in New York Monday, the highest in four years. Plug climbed 25 percent to $10.31, the highest since October 2009, and Ballard Power Systems Inc. climbed 30 percent to more than a seven-year high of $6.88.

Cheap natural gas from shale, concerns about blackouts after Hurricane Sandy and improvements in quality that have made fell cells easier to finance are making the technology seem like a viable source of electricity, said Jeffrey Osborne, an analyst at Stifel Nicholas & Co. in New York. Fuel cells use gas or hydrogen to produce electricity through a chemical reaction.

“These publicly traded science experiments are now talking about becoming profitable after years of losses,” Osborne said today in an interview. “The applications they chose to develop are finally becoming competitive, whether it’s forklifts or backup power for cell towers or power plants.”

Wal-Mart Order

FuelCell, based in Danbury, Connecticut, makes large power systems that generate electricity for campuses, factories and utilities. Plug Power, based in Latham, New York, makes systems that run forklifts and last month said Wal-Mart Stores Inc. agreed to install more than 1,700 of them at six North American distribution centers.

Ballard Power, based in Burnaby, British Columbia, supplies the fuel-cell stacks that run Plug’s forklifts well as its own systems for buses and backup-power supplies for mobile phone towers.

Ballard, which got 11 percent of its revenue last year through its Plug relationship, will benefit from efforts to increase the reliability of mobile phone systems in the wake of Hurricane Sandy and other emergencies that leave consumers without power, Osborne said.

Backup Power

In the U.S., the Federal Communications Commission may consider requiring mobile-phone towers have backup power systems that have more storage capacity than most battery-back-up systems currently available, he said. That may boost Ballard’s sales to telecommunications companies like Sprint Corp.

FuelCell is benefiting from gas prices that make its power plants competitive with electricity from the grid, he said. Gas on the New York Mercantile Exchange has gained 10 percent this year to $4.66 per million British thermal units.

“With $8 gas, they come in around 14 cents a kilowatt- hour,” Osborne said. “Even after the polar vortex increased fuel demand, with current prices and a federal tax credit they come in under 10 cents.”

Global Demand

That puts adding fuel cells to a campus in line with what they can get it for from their local utility, where the average commercial customer pays 9.9 cents for electricity.

Sales of stationary fuel-cell systems may increase to $40 billion worldwide by 2022, from about $1.4 billion last year, according to a report Monday from Navigant Research.

Plug Power Chief Executive Officer Andrew Marsh said the company will “make money this year” during a March 7 CNBC interview. Plug is scheduled to release fourth quarter earnings after the close of regular U.S. markets on Thursday.

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Fuel-cell manufacturers including Plug Power Inc. that have been the top three Nasdaq gainers in the past month surged Monday ahead of earnings reports this week that are expected to show them on the path toward profitability.
Science,Experiment,Stocks,Investor
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2014-29-10
Monday, 10 Mar 2014 05:29 PM
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