Fuel cell stocks are up and running again after a pullback, primarily triggered by profit booking by investors. Leading players in the plug power space like FuelCell Energy Inc (NASDAQ:FCEL), Ballard Power Systems Inc. (NASDAQ:BLDP) and Plug Power Inc (NYSE:PLUG) have gained 2.74%, 5.10% and 12.77%, respectively, yesterday.
The pre-market trade also indicates a positive bias, with FuelCell Energy and Plug Power expected to add to current positions.
A Fleeting Setback
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Fuel cell stocks were having a dream run since the beginning of the year, till correction in the prices took place on Mar 11. FuelCell Energy, Ballard Power Systems Inc. and Plug Power Inc. had shed as much as 16.54%, 25.87% and 41.51%, respectively, on that day.
Chances of Another Plunge?
After the sudden correction in prices of fuel cell stocks investors are bound to become more cautious. Chances of these shares nose diving again will definitely play on their minds.
Having said that, we note that fuel cell technology has strong prospects in the energy space. This will be the driving force for these stocks going forward. Though a big order from the retail major Wal-Mart Stores Inc.(WMT) helped lift Plug Power’s prices, fuel cell stocks were hot even prior to that deal.
What Lies Ahead?
A report from the U.S. Department of Energy (DoE) suggests that fuel cell technology will have a huge market demand in the next two decades. Alternate sources of power generation may well turn out to be our only backup once fossil fuel sources dry up. The support from the U.S. government could also result in further developments in this space.
This should be assurance enough that fuel cell stocks dovetailed with other stocks in the renewable space, particularly solar, will do well for any portfolio skewed towards energy. There may be minor corrections in prices going forward but on the whole these are expected to do well.
Pent-up demand for this technology, strong fundamentals and our Zacks Rank suggest that investors can stay invested in these niche energy stocks. While Ballard Power has a Zacks Rank #2 (Buy), FuelCell and Plug Power each hold a Zacks Rank #3 (Hold).