May 3rd, 2022 | 12:11 CEST
The energy madness: NEL, dynaCERT, Plug Power, FuelCell Energy - Hydrogen shares and the next price explosion?
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"[...] We can convert buses and trucks to be completely climate neutral. In doing so, we take a modular and incremental approach. That means we can work with all current vehicle types and respond to new technology and innovation [...]" Dirk Graszt, CEO, Clean Logistics SE
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 top dog sets the pace
Rising commodity prices resulting from the Ukraine war have led to a stronger focus on alternative energy sources worldwide. H2 specialist Plug Power is feeling the effects of this. Acting CEO Andy Marsh believes the Company is in a good position to supply the lavish budgets of nations with hydrogen-related innovations accordingly. "The faster we move to renewable energy and hydrogen, the faster Europe and the world will be more independent," Marsh said, referring to rising commodity prices and sometimes strained supply chains.
Unlike electric vehicle manufacturers, for example, which often need copper, graphite and nickel for their lithium batteries, Plug Power is not much affected by supply chain disruptions. It mainly needs iridium to make fuel cells, the majority of which currently come from South Africa. Plug Power's sourcing appears to be well-positioned. It has offtake agreements with British technology company Johnson Matthey and Australia's Fortescue Metals to supply the precious metals needed for its electrolyzer systems. There, they are even jointly developing a factory for advanced ideas in H2 technology.
The Plug share is not yet able to benefit from the promising situation. After a spring rally to over EUR 27, it even went below the EUR 20 mark in the recent NASDAQ correction, and the technical trend has been severely damaged. The downward pressure probably continues due to the tough interest rate environment, even though Plug Power should still have sufficient liquid funds and does not need to refinance. Watch out for the last chart stronghold at EUR 14.26 because this is the low from last year. Continue to observe only!
dynaCERT - Clean diesel for a green future
If you want to save diesel and install clean technology in your vehicle, you should look at the H2 technology from dynaCERT. Over several years of development, the Canadians have now come up with a production-ready technology that could take off given current fuel prices.
dynaCERT was one of the technology pioneers to look at the benefits of hydrogen technology very early on and now has name recognition and market access in North America. Joe Biden had promised more funding for GreenTech in one of his last addresses before Congress. Now there have also been recent changes in Canada. There is to be a new law for an additional 30% tax credit for investments in clean technologies, focusing on net-zero technologies, battery storage, and clean hydrogen. dynaCERT, its partner Galaxy Power, and potential clients have been meeting with ministers, selected members of Parliament, and senior government officials for more than two years to advance the implementation of tax deferrals and credits for clean technologies. The project also has support from top government officials led by Prime Minister Justin Trudeau.
The new clean technology incentives can significantly increase the potential of fast-growing technology companies through the use of flow-through financing, which could enable Canada to achieve a strong footprint in reducing global greenhouse gas emissions. The incentives for clean technologies in the 2022 budget are in line with the United Nations Paris Agreement goals. dynaCERT is one of the companies that can stand ready with handy solutions for an H2-induced climate pact. The willingness of the private sector to invest is also important here, as this creates new jobs and serves as an important economic measure in the impending crisis. CEO Jim Payne will report on the latest progress at the next International Investment Forum on May 19 at 4:00 pm CEST.
The DYA share is currently trading between CAD 0.14 and 0.17. Thus, the sell-off on the growth stock markets did not pass without a trace. However, with a market capitalization of approximately 53 million CAD, only the investments in the technology are currently valued. With further increasing sales in the technological solutions, a turnaround should be initiated quickly here.
NEL versus FuelCell Energy - The numbers are getting exciting
The protagonists of hydrogen technology often base their forecasts on the testimony of investment banks, which in turn, however, primarily pursue capital market interests. How, when and ultimately where the largest investments in new technologies will be made depends primarily on the financial capacity of the states because the whole issue, similar to e-mobility, will only succeed with large subsidies. Nevertheless, investment bank Goldman Sachs believes that 20% of the world's energy needs will ultimately be met by hydrogen in the future.
In a challenging environment, Nel ASA shares even reached highs of EUR 1.85 again in March but subsequently fell back to EUR 1.32. FuelCell Energy suffered a similar fate. After a steep recovery from EUR 3.20 to over EUR 6.00 in March, the share price dropped back below the EUR 4 line just as quickly. Both shares are currently characterized by a strong negative momentum to the downside. The turnaround is still waiting.
Nel ASA will present its figures for the first quarter this week. Experts estimate earnings per share at an average of NOK -0.082, around 80% higher than in the previous year. An increase in sales of 60% to NOK 251 million is also expected, with a full-year target of NOK 1.2 billion. If this is achieved, the price-sales ratio (P/S) for 2022 will fall from 24 to 17. However, the stock is still not cheap. Nevertheless, most analysts maintain their "buy" ratings, with only JPMorgan issuing an "underweight".
FuelCell's next quarterly figures are not expected until June. For Q1, the EPS was minus USD 0.15. Sequentially, however, it should now go up from quarter to quarter. Of course, the break-even point will not be reached until 2026. By then, sales should also have risen from USD 134 million to USD 469 million. Currently, FuelCell trades at a P/S of about 11. After an 83% drop from its high, this is already the first step towards improving valuation, but for investors, the stock remains a casino stock for momentum plays. Both Nel and FuelCell are still nothing for a balanced risk/reward ratio on the current basis. All other things being equal, further price losses may be possible.
The hydrogen sector has good chances in the international competition for climate-neutral energy generation. However, the current valuation cycles have not yet advanced into a sufficiently favorable zone, so the risks remain high. We had previously issued warnings to this effect. The Canadian player dynaCERT has launched a suitable unique product on the market; now, it just needs to be sold in decent quantities.
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