March 22nd, 2022 | 10:08 CET
NEL, dynaCERT, Plug Power, Ballard Power - Oil & Gas infinitely expensive, where are the hydrogen stocks?
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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 crisis provides a tailwind
This time, the trend booster for hydrogen shares came from the East, as the armed conflict again directed attention to alternative energy concepts. Although hydrogen can offer medium-term solutions, it is currently still too expensive to produce. Nevertheless, things could not have gone better for the shares of the market leader, Plug Power.
The recently reported figures were in line with estimates. As expected, the fuel cell and hydrogen specialist achieved the largest annual sales in the Company's history in the full year 2021. Although there is still a net loss on balance, Plug Power believes it will break even as early as 2023. In addition, the Company has also confirmed its sales targets for the years 2022 to 2025.
For the full year 2021, Plug Power reported revenues of USD 503 million, but net loss narrowed only slightly to USD 460 million from a handsome loss of USD 596 million in fiscal 2020. The 2021 performance was supported by a number of partnerships and strategic acquisitions that have further positioned Plug Power as a hydrogen ecosystem specialist. These include joint ventures with SK, Acciona, and Renault and partnerships with companies such as Airbus, Lhyfe, and Phillips 66. By 2024, the Company expects the fuel sector to generate cash flow for the first time and approach its issued margin targets.
The PLUG share price was able to turn in dynamically at the double low as of May 2021 at around EUR 16.50 and quickly regained the EUR 23 mark. That is a rebound of almost 40% in just 2 weeks. At EUR 24.5, a resistance zone is now lurking, which could lead to another significant setback.
dynaCERT - The time is now for diesel engine retrofits
If not now, when? The global oil shortage has caused the price of a barrel of Brent to explode to USD 135. Diesel prices at the pump went up even more dramatically. This should play right into the hands of dynaCERT's technology. Fuel savings of around 10% can be achieved by adding dynaCERT's hydrogen technology, and the combustion process is also much cleaner. The required conversion costs for a truck appear in a whole new light today due to the chaotic price situation for fuels. Public agencies, in particular, should now use their sustainability budgets wisely.
The Canadian Company manufactures and sells carbon emission reduction technology. It is designed for use in many types and sizes of diesel engines used in on-road vehicles, refrigerated trailers, off-road structures, power generation plants, mining and forestry equipment. dynaCERT was one of the early adopters of the benefits of hydrogen technology and now has a mature product. If orders explode due to the current world energy shortage, they may not be able to keep up with deliveries.
DYA shares rose 25% in March, and sales are rising again. Due to the current run, there will probably be revenue increases to report in the following figures. In addition, chart technically, things should get down to business above the CAD 0.22 mark because the Glasgow climate conference in November 2021 pushed the price up a whole 100% at exactly this mark. Risk-conscious investors are now building speculative positions.
NEL versus Ballard Power - Hardly any turnover, but a lot of fantasy
Investors should clearly distinguish between fundamental growth numbers and momentum-driven upside since the collapse of the 2021 hydrogen hype. Shares of Nel ASA and Ballard Power hit their 12-month performance lows in mid-February 2022. With the release of subdued 2021 full-year numbers, reality ultimately wiped the preceding euphoria off the table.
Nel's figures were more than sobering. Sales of NOK 798 million after NOK 652 million left an operating loss (EBITDA) of NOK 475 million after NOK 252 million. Including all research and development expenses, the bottom line is a net loss of NOK 1.67 billion - the equivalent of EUR 168 million. However, Nel's order backlog remains at a record level of NOK 1.23 billion at the end of 2021. The Company did not provide a concrete outlook for 2022. At Ballard Power, the results do not read much better. On the sales side, CAD 133.5 million were on the books, after CAD 130.6 million the previous year. That is not the kind of growth one can talk about. Earnings per share for the full year were also negative at CAD -0.498, and the loss doubled compared to 2020.
No problem for the course of Nel and Ballard because the analyst community had partly assumed even worse figures. With the tailwind of the current fossil energy crisis, both stocks took off since the beginning of the war. Nel shot the bird with +75% in just 2 weeks, and Ballard was able to gain a full 40%.
It seems this proves that published figures are only shocking in the short term - in the long term, it is simply the imagination that counts, and in the case of hydrogen, this imagination comes in the most colorful of colors. Ride the trend, but get out when the momentum weakens, because then it will probably head south again quickly.
The hydrogen sector continues its usual roller coaster ride. But the investment community is learning to think in cycles. And after the hype is before the crash. So be careful at the edge of the platform when the current momentum of H2 blockbusters wears off. The specialty stock dynaCERT is suitable as a speculative addition at the current level.
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