August 22nd, 2022 | 13:57 CEST
Joe Biden boosts hydrogen stocks: Nel ASA, Plug Power, dynaCERT in rally mode
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"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Plug Power - The stock market darling deflates a bit
Biden's original plans for climate protection and social reforms were among the core projects of his term. While the current package provides the most comprehensive investment in the US to combat climate change, according to government figures, the present package is a compromise because of disputes within the Democrats. That is because it contains only a fraction of what Biden once wanted to pass. The fact that the law was passed at all is nevertheless a victory for the President - until recently, it was hardly expected. The climate protection measures included are intended to reduce climate-damaging CO2 emissions in the US by around 40% by 2030 compared to 2005.
H2 stock market darling Plug Power had already staged a pronounced rally before the law was passed. Since the lows in May, the value was able to put a remarkable 120% recovery together. It was primarily boosted by statements favouring decarbonized global mobility and some good deals. Plug Power is looking to land a fair amount of public budgets and plans to quadruple sales by 2026 on current sales of just under USD 1 billion in 2022. The Latham, New York-based group, wants to reach profitability as early as 2025. Even though analysts calculate a median price target of USD 37.46, a price-to-sales ratio of 16.6 is already exceptionally high and characterized by a lot of imagination. The value has only lost 12% in the last week, a healthy consolidation after the politically induced buying panic. Wait and see where the current consolidation leads.
dynaCERT - Strong rebound points to upcoming certification
We have already discussed the Canadian technology company dynaCERT many times. After a strong share price consolidation due to Corona-related showstoppers, the stock is currently experiencing a revival. From the bombed-out level at about CAD 0.10, the value recovered with huge turnovers by the end of last week by a full 80% to CAD 0.18.
There are several reasons for this: The company was one of the technology pioneers to look at the benefits of hydrogen technology very early on and now has good name recognition and market access in North America. It fits perfectly with Joe Biden's announced Climate Bill. In addition, dynaCERT has been engaged for several months in the certification process of VERRA, the globally recognized institute for CO2 certificate approval, which provides an important proof of concept, especially for disruptive technologies. VERRA's global standards and frameworks serve as a linchpin for channeling funding into activities that address some of our time's most pressing environmental issues. The allocation is likely to be immediately anticipated by the Exchange. If it comes, the way will be clear for a nationwide rollout of dynaCERT technology. Contracts like Plug Power together with Walmart would then be possible for larger fleet associations in North America. Anyone familiar with the truck density on North America's freeways will be able to appreciate the dimensions for potential energy savings.
At the upcoming IAA for commercial vehicles in Hanover in September, the stage is set for a comprehensive presentation of the technical solutions, into which more than CAD 50 million in development costs have already flowed since 2018. However, the DYA share will likely celebrate the expected news and trade show appearance accordingly before then. The stock is speculative but highly interesting.
Nel ASA - First consolidation after the figures
The Norwegian hydrogen company Nel ASA presented its half-year figures on 11.08. The shares then went into reverse gear for the time being because the analysts' expectations could not be reached by far. Thus, sales in the second quarter increased by 12% from NOK 163.7 to 183 million, but the experts had expected NOK 244 million. The bottom line is still a loss of NOK 0.18 per share, which also deviates by around 25% from consensus estimates.
EBITDA was NOK -197 million after NOK -120 million due to high investments, but order intake reached NOK 236 million in the second quarter. That is still 61% more than in the same quarter last year, and at NOK 1.439 billion, the order book is fuller than ever. A further capital increase in the first half of the year enabled Nel to expand its cash position to over NOK 3.6 billion by the reporting date, and that helped for the acceptance of expected public orders. Nel is dependent on these, as the private sector's willingness to invest in H2 technologies is still very low.
With a current P/S ratio of 24, the stock is anything but cheap. From a chart perspective, the volatile stock should not fall below the EUR 1.47 mark again; otherwise, there is a threat of trouble. Overall, the Nel share is a speculative hopeful on erratic developments within the H2 sector, but investors should set a tight stop. See the update on this at researchanalyst.com.
Hydrogen technology has relevance in the fight against atmospheric warming. Therefore, the sector always benefits from positive news about new government budgets. The current valuation of the sector protagonists is correspondingly high. Those who invest in a diversified manner reduce their portfolio risk.
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