Markets have broadly moved higher over the past two weeks, despite concerns from Europe and poor data from China. However, one space has really stolen the show over the time frame, the fuel cell stock industry.
This segment focuses on companies that convert chemical energy from fuel sources into electrical power for use in a variety of applications such as industrial vehicles, backup generators, or replacements for more traditional batteries. The industry has been an up-and-coming space for quite some time but it has definitely broken out to start March.
Top companies in the space such as FuelCell Energy Inc (NASDAQ:FCEL), Ballard Power (BLDP), and Plug Power (PLUG) have skyrocketed in the past few weeks with all three adding at least 170% in the past ten sessions.
Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More
This amazing run does have some fundamentals behind it too, as investors have witnessed a solid revenue report from FuelCell Energy Inc (NASDAQ:FCEL), a big order from Wal-Mart (WMT) for PLUG products, while the general push towards greener energy companies hasn’t hurt either.
But after such an incredible move higher, investors have to be asking can this run continue?
Personally, I like the space for the long term, but I think that a pullback is long overdue. Only one company, BLDP, has a Zacks Rank of #2 or better, while the other two firms have Zacks Ranks of #3 (Hold). Plus, all three are still money losers, and are projected to have negative earnings beyond 2015 as well, suggesting that the space may not have arrived just yet.
However, fuel cells have also been talked up as the next big thing in technology for quite some time now, and it is possible that now is the long-awaited breakout. Though as we have seen in the solar industry, it can be extremely rocky after such a big move higher in an emerging technology.
What do you think?
Is this a new era for the fuel cell space, or is a massive drop due for this surging sector?
Let us know what you think in the comments section below!
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