05. March 2021 | 10:04 CET
The best hydrogen stocks! Plug Power, Ballard Power, Nel ASA, dynaCERT
Things are getting exciting in the hydrogen sector. For the past 3 weeks, the question has no longer been where the upward trend will take us; instead, we are primarily interested in how robust a business model is to survive a major stock market correction. Markdowns of a good 30-40% have been made across the industry so far - given price increases of up to 2000%; it is a piece of cake when you calculate from the bottom up. However, some investors have entered the market at the highest prices - unfortunately, that's how mean stock market life is - the last one to bite is the dog. Today, we look at the business models of well-known hydrogen protagonists and go in search of the lost fuel for higher quotations.
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ISIN: US72919P2020 , CA0585861085 , NO0010081235 , CA26780A1084
"[...] 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 high is defined for now
Plug Power Inc. is an alternative energy technology provider focused on developing and commercializing hydrogen-based fuel cell propulsion systems primarily for industrial applications. The Company equips mostly off-road commercial vehicles and stationary drive systems. The PEM fuel cell product lines offer comprehensive customer solutions for converting material handling vehicles to the new fuel cell drive system.
Plug Power's shares have impressively demonstrated the fact that the law of gravity can rarely be defied. On January 7, it went up with a considerable gap. At the end of January, the price flew up to USD 73.50, and then it was over for the time being. In February, the crash then began to yesterday's level of USD 38.2 - a 49% drop.
If one goes on the fundamental search, you will not find what you are looking for, just as one searched for the reasons for the euphoria in the upward trend. The keyword "hype" is appropriate; it comes and goes without announcement or warning; who flies along usually needs a parachute or a well-defined exit strategy. Many investors did not have this, as can be seen from the sales trend, with enormous turnovers upward - with only 30% of the turnovers downward, i.e. the losses slumber in the depots of ignorant ones, the knowing ones sold long ago.
If no further hype breaks out, the price target derived from the chart is approx. USD 20.00 - even then, Plug Power still has a P/E ratio of 20. One needs to disconnect from the thought that the zone around USD 70.00 could be reached again in the foreseeable future. The reality will be between USD 55.00 and 20.00, so one needs to find a sustainable strategy.
Ballard Power - Futuristic buses with ADL
Ballard Power has successfully completed the capital increase announced on February 10, placing 14.87 million common shares at a price of USD 37.00. As a result, the Canadian fuel cell manufacturer will receive gross proceeds of USD 550 million. Good who can approach the capital market these days - such valuations call for fresh capital raising.
Ballard Power intends to use the net proceeds from the offering to strengthen the Company further and flex its growth strategy. This includes product innovation, investment in production capacity expansion, future acquisitions, strategic partnerships and investments in new businesses.
Meanwhile, Ballard is reporting good progress from its large Genset business. With fuel cell systems from Ballard and the electric drive system from Voith, the British bus manufacturer ADL plans to launch a new hydrogen double-decker before the end of this year. According to the manufacturer, the range of the emission-free bus with the meaningful project name H2.0 will be the equivalent of around 480 kilometers. Good news for the stumbling Ballard share, which like its industry peers, has already lost more than 30% of its top.
NEL ASA - Capital increase accomplished for the time being
Everyone wants to be the first now. Nel ASA also carried out a capital increase last week. Berenberg Bank took the successful private placement as an opportunity to publish a new study - which shareholders will undoubtedly like to hear. The analysts increase their price target to NOK 33, around EUR 3.23 and maintain their 'Buy' rating. Interestingly the Nel price had already climbed to the EUR 3.40 mark in January and has now corrected to EUR 2.40.
On February 24, Nel confirmed that it had carried out a capital increase of around EUR 120 million. The proceeds are to be used for larger projects, a higher project volume, and strategic opportunities. Industry experts believe that Nel is still well positioned to take a leading role in the growing hydrogen industry. For this reason, the massive investments are justifiable but will still result in negative EBITDA in 2021.
No doubt, Nel has a solid balance sheet, strengthened further by the recent capital increase. At the accompanying Capital Markets Day, Nel pointed to a strong pipeline and the associated high investments, which is why a full cash box is needed. Investors who were short in the share should take advantage of the expiring correction in the next few weeks and find a re-entry at EUR 1.90 - 2.20.
dynaCERT - A nerve-saving alternative with potential
In the slipstream of the big billion-dollar hype around the hydrogen blockbusters, the Canadian dynaCERT is developing quite solidly. The set milestones are well under control. The solidly financed Company is developing an auxiliary device for combustion optimization with hydrogen, especially for heavy-duty diesel vehicles. It has been extremely successful with logistics companies.
Numerous R&D experts at dynaCERT are eager to expand their leadership role in Canada's new hydrogen economy while working with other high-level industry leaders such as Martin Technologies to bring current expertise in this technology further to the application level. There is a great need for clean technologies worldwide. Each solution must be seen as a climate building block and complement local and international sustainability programs. dynaCERT is one of these technology drivers with an application that delivers measurable savings.
In Martin's case, this involves a collaboration agreement that will further move the technical aspects of dynaCERT's existing HydraGEN technology into the industrial track for use in the original equipment market; this is the next step in growth this year.
The dynaCERT share price has weathered the storm in the hydrogen space and is trading back at the level it was at the beginning of January 2021. It should be noted that the stock has nearly tripled in value since March 2020. Currently, the share is quoted at around CAD 0.60 - so use the consolidation to get back in because the story is developing steadily forward.