FuelCell Energy – falling shares present new opportunities

SureSource
SureSource 3000, © FuelCell Energy

FuelCell Energy’s shares have experienced a sharp drop for seemingly no reason. It may have been a tactic intended to push down the price, for example, to profit via short sale in anticipation of the fall and convert warrants later. That is pure speculation, of course, but people say these things have happened before. In any case, the most recent investment decisions seem to be an unmistakable sign that institutional investors believe in the company’s prospects and its technology. ExxonMobil is drowning papers, such as the German Handelsblatt business magazine and the Financial Times, in ads that make explicit mention of FuelCell Energy’s carbon capture technology. I don’t believe that their actions could be classified as greenwashing, a designation that would apply if Exxon were only parading around carbon capture to polish its eco-friendly image and has no intention of following through with its implementation. I would even go as far as saying that if that were the case, the competition wouldn’t stand idly by and, I believe, would push ahead with the same ideas. In short, FuelCell Energy (Nasdaq: FCES) will be one of the most promising candidates for investing over the next years.

Toyota to produce its own H2 soon

On Nov. 30, it was announced that Toyota had commissioned FuelCell Energy to erect a fuel cell system called SureSourceTM at the Port of Long Beach in California. Biogas conversion will make the system a production facility for fully renewable hydrogen to be used for the port’s delivery trucks. Once it is set up, the system is also said to be producing electricity for 30,000 homes. Naturally, shareholders were delighted when the news broke. I expect more bookings to follow in its wake.

In a recent Handelsblatt interview, VW’s brand manager, Herbert Diess, had few good things to say about the fuel cell. In his opinion, the cost of constructing H2 refueling stations was extremely high and hydrogen production required substantial amounts of energy, while the technology itself had been plagued by comparatively low efficiencies. Toyota, on the other hand, believes in the fuel cell’s potential and is more than willing to prove it. It is also becoming ever more likely that countries such as China will start shifting the focus of their electric transportation strategies from batteries to fuel cells and green hydrogen. VW has yet to open its eyes to see the writing on the wall, but it won’t have much of a choice considering the sheer size of the Chinese market. The German carmaker is relying on charging points while Toyota is collaborating with its partners to find a remedy to the H2 infrastructure issue.

Risk warning

Share trading can result in a total loss of your investment. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small and mid-cap ones, i.e., they may experience high stock volatility. This article is not to be taken as a recommendation of what shares to buy or sell – it comes without any explicit or implicit guarantee or warranty. All information is based on publicly available sources and the content of this article reflects the author’s opinion only. This article focuses on mid-term and long-term prospects and not short-term profit. The author may own shares in any of the companies mentioned in it.

Written by Sven Jösting in December 2017

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