Send me real-time posts from this site at my email
Motley Fool

Why Plug Power, Bloom Energy, and Clean Energy Fuels Stocks Popped Monday

What happened

It's starting to look like it will be another good week for alternative energy stocks.

Shares of hydrogen fuel cell stock Plug Power (NASDAQ: PLUG) are up a respectable 6.1% as of 1:20 p.m. EST, while Plug rival Bloom Energy (NYSE: BE) and Clean Energy Fuels (NASDAQ: CLNE) (a natural gas stock) are doing twice as well -- surging 14.2% and 12.9%, respectively.

Curiously, although it's sporting the smallest stock price gains of the three, Plug Power stock is the only one of these stocks with good news supporting it.

Image source: Getty Images.

So what

Over the weekend, Barron's magazine called out Plug Power as "one of this year's stock market standouts," with the stock up sixfold in 2020, and setting the stage for a $1 billion stock offering that promises to give Plug enough ready cash to fuel its growth for years to come.

Barron's sad Plug is partly benefiting from the widespread popularity of renewable energy, "electric vehicles, hydrogen power, and the fuel cells" stocks among investors this year. (And this wide-ranging call-out of renewable energy technologies may explain investors' enthusiasm for Bloom Energy and Clean Energy fuels today.)

But in the magazine's view, Plug's popularity with investors is also a function of its having signed up "two big names" -- Walmart and Amazon -- as customers for its fuel cell-powered forklifts. Barron's notes that this has been good news for Walmart and Amazon because, thanks to their having negotiated warrants to purchase Plug stock as part of their sales agreements, they've been able to profit from the rising price of Plug Power shares -- meaning they essentially "got paid to buy its products."

Now what

Here's the real question for investors as they think through whether Plug's sales success will continue:

Plug recorded a lot of sales to Walmart and Amazon largely because it was selling warrants for its stock alongside fuel cells. (Every $50 million worth of fuel cells purchased entitled Walmart and Amazon to buy another batch of warrants, according to Barron's). But is Plug going to have to continue pairing warrants with fuel cells for every customer it tries to sell fuel cells to, to incentivize sales of its fuel cells?

And what happens to Plug's sales growth if it tries to sell the fuel cells without the stock warrants? It might not have any problem at all as fuel cells grow in popularity around the globe. But it might have a lot of problems if all that companies -- and investors -- are really interested in owning is red-hot Plug stock.

10 stocks we like better than Plug Power
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Plug Power wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of November 20, 2020

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Clean Energy Fuels and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue