Plug Power (NASDAQ:PLUG) is an American company that develops and sells hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity. The company has been a leader in this emerging market of clean fuel and is growing a large following of both consumers and investors.
Plug Power is a popular stock but it has had a rough ride recently. The share price was ~$3 at the start of 2020, saw explosive growth up to ~$70, and is now sitting around ~$25. The recent downturn was due to a press release in March, announcing that the firm would be restating their financial results for periods 2018-2020, due to a review of accounting methodology by their auditors. Whilst the technicalities primarily focused on treatment of lease agreements, cash and profitability were not expected to be impacted and the growth outlook would not be interrupted. Nevertheless, investors chose to sell and ask questions later as sentiment turned negative and conservative.
The share price is now starting to turn, as 90% of Bloomberg-surveyed research analysts on Wall Street have recommended the stock as either ‘Buy’ or ‘Hold’, and we believe the positive outlook and buying opportunities are back.
Friends in the right places
Plug Power is perfectly positioned at a promising intersection between politics and business. The current US government is making a push to create a domestic hub of clean energy industries, particularly through the ‘Infrastructure Investment and Jobs Act’. This is a trillion-dollar infrastructure bill that will be presented for a Congress vote at the end of September. Plug Power would be a significant beneficiary of this act, as it would help increase the wider accessibility and adoption of hydrogen energy, whilst reducing the costs of R&D and labour expansion through subsidies and incentive programmes. On September 1st, Plug Power hosted Senate Majority Leader Chuck Schumer at the Green Hydrogen Plant in New York, demonstrating their key role in leading the green hydrogen economy.
In July, Plug Power closed a milestone deal with Apex Clean Energy to co-develop hydrogen facilities. As part of the deal, it will have the largest onshore wind-powered project in the world. These joint ventures and deals are expected to continue to grow in both quantity and in size.
At the same time, the company is becoming a B2B power, counting Amazon, AT&T, Boeing, and NASA as a select example of their customer base.
Strong Q2 Earnings
Following the accounting issue, the company has started regaining investor confidence thanks to a strong Q2 earnings release. Quarterly revenues at ~$125M beat the market consensus of $114M, and the company increased their annual revenue target from $475M to $500M. The executive management team also committed to revenue guidance of $750M for 2022, signalling a strong trajectory for the company’s expected financials.
We believe the recovery in investor sentiment and the continued growth outlook of the company make Plug Power stock a strong buy opportunity for your portfolio.