The company uses fuel cell for power plants, different from PLUG, which is focused in forklift market. My understanding is that it is primarily for backup power generation. The main positive for the company is the perceived enormous upside if fuel cell technology gets wide spread adoption. This potential reflected in triple digit spikes, from time to time.
Although I have been involved in the stock market for many years, I really don't have any experience in analyzing companies of this kind and stock price under $10. I don't have a success model that I can follow. Please take what I say with a bag of salt, but I do want to be as honest.
Fundamentally, I see mostly negatives:
- The company has a long history of losing money. There is no visibility of future profitability.
- The company has been around for almost 20 years, and yet its technology is still at its infancy. It is like a baby who never wants to grow up (different animal:). Usually, a break-thru or disruptive tech takes off very quickly (radios, tvs, cell phones, pcs, etc.).
- The fuel cell technology is not completely clean and green because it still relies a relatively clean fossil fuel: ngas, but it is a fossil fuel nonetheless. Humans are becoming ever more challenged in finding and producing fossil fuel. The fact that we need to unlock ngas from shales shows that. Fracking can extend our reliance a bit longer, but ultimately, we need to move to renewables.
- The co. is at the mercy of the capital markets (equity and debt) for its survival. If you look, the company has a long history of stock issuance (dilution).
- Natually, the co. is a big promoter of its own stock, with news of contract winnings. This is a big red flag because "pump and dump" was one of the worst dirty tricks in financial market.
- Institutional ownership is only 31% and mutual fund ownership is around 8%. According to W. O'Neil, it takes big money (smart money?) to move stocks, not retail.
Technically, it does not look either:
- The market has been very brutal towards hi-beta stocks lately.
- The stock is falling off from the right shoulder of the pattern, a major negative. According to O'Neil, you want buy break-out, not break-down.
Questions that I don't know the answers yet:
- Is it more efficient and more cost-effective to use fuel cell instead of burning ngas to get power?
- What is the cost-reducing and efficiency-increasing curve going forward?
- There are ngas cars too. Is it more efficient and cost effective to use fuel cell cars instead?
Again,
I want to emphasize that I don't have a method for stocks of this kind.
If I were to apply it, I would wait until the stock trades above $10 at
least before I would even consider it.
my 2c.
