PLUG: Fuel Cell Stocks Crash After Incredible Run

Plug Power Corp PLUG FCELPlug Power Corp PLUG

The price of fuel cell stocks finally showed signs of correction after an incredible run since the beginning of 2014. Leading players in the plug power space like FuelCell Energy (FCELSnapshot Report), Ballard Power Systems Inc. (BLDPSnapshot Report) and Plug Power Inc (NASDAQ:PLUG) (Snapshot Report) have shed 16.54%, 25.87% and 41.51%, respectively, yesterday.

Drop After a Dream Run

Fuel cell stocks were on a bull run since the beginning of the year, fired by strong fundamentals and the new-found prospects of fuel cell technology in the green energy space. In addition, a big order clinched by Plug Power from retail giant Wal-Mart Stores Inc. (WMTAnalyst Report) added further stimulus to its share price.

However, a correction in prices were on the cards as the top three stocks, namely, FuelCell Energy, Ballard Power and Plug Power Inc (NASDAQ:PLUG) had gained nearly 178.7%, 325.6% and 565.2% respectively till Mar 11 from the beginning of the year.

Fizz Over for Fuel Cell Stocks?

Has the bubble really burst for fuel cell stocks? As we are well aware, stringent emission policies in the U.S. will drive more and more investments in the alternate energy space.

The sudden drop in prices does not necessarily mean that fuel cell stocks have run its course like a meteor burning up. We believe it is only a temporary pullback, and a profit booking phase for investors. Trading volumes of these three stocks on Mar 12 remained pretty high indicating that investors were looking to book gains.

Future of Fuel Cell Stocks

The question now is whether these stocks will regain lost ground. Historically, we have seen that the adoption of new technology comes with some growing pains. The support of the U.S. Department of Energy (DoE) and interest of the industry majors in this space will be the driving force for these stocks going forward.

Ballard Power has a Zacks Rank #2 (Buy) while FuelCell and Plug Power Inc (NASDAQ:PLUG) hold a Zacks Rank #3 (Hold). The Zacks Consensus Estimate of these three stocks has shown an upward trend of late.

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