There’s a lot to like these days about Plug Power (NASDAQ:PLUG) stock. The hydrogen fuel cell company’s stock is up 250% on a year-to-date basis, reaching levels not seen since 2009.
Plug Power is coming off a strong second-quarter earnings report in which it recorded beats on both revenue and earnings per share.
And to top it off, it has opened the door to a powerful new revenue stream that could keep PLUG profits coming for years.
It’s no wonder why Plug Power saw an 18% gain after it reported earnings last week.
Let’s dive a little deeper into this stock and see why the market’s so bullish on PLUG stock these days.
Plug Power Earnings at a Glance
Plug reported its earnings for the second quarter on Aug. 6, and investors were ecstatic with the report. Revenue came in at $68.07 million, which topped analysts’ estimates of $59.47 million. That’s an 18.3% increase from the same quarter a year ago.
Earnings were also a pleasant surprise. Analysts had expected a loss of 10 cents per share, but Plug recorded a better-than-expected loss of 2 cents per share.
For the quarter, Plug Power reported a net loss of $8.67 million, which was better than the company’s net loss of $18.09 million a year ago. But the operating loss of $26.34 million was much greater than the $57.54 million operating loss in the second quarter of 2019.
Plug Power reiterated its guidance for 2020, announcing that it expects gross billings for the year for $110 million to $115 million.
It also raised its 2024 revenue and EBITDA targets based on its acquisitions of United Hydrogen Group and Giner ELX. Plug says it currently can produce 6.4 tons of hydrogen per day, and the acquisitions will allow it to produce 10 tons per day.
A Huge Opportunity for PLUG Stock
Plug Power is best known for its fuel-cell business and the technology that powers industrial fork lifts used in warehouses and big-box retailers around the world.
And it’s a growing business with huge potential. Plug Power recently announced that it is providing Asda, a U.K.-based supermarket that is wholly owned by Walmart (NYSE:WMT), with hydrogen fuel solutions to power Asda’s lift truck fleet.
H.C. Wainwright analyst Amit Dayal pointed to the deal in maintaining his “buy” rating for PLUG stock and setting a $14 price target. He says in a research note that Plug Power’s hydrogen fuel cell-powered fork lifts are “quickly becoming the go-to solution” for big-box retailers in the U.S. and Europe.
How lucrative is that solution? Dayal says there are 5 million forklifts in operation around the world and more than 1 million are sold annually. So far, Plug Power has only 32,000 forklifts deployed, so the opportunity is attractive.
Plug Could Expand Into Big Trucks
Barron’s reports that another, perhaps even more exciting, opportunity for Plug Power lies within the idea of using fuel cell technology to power heavy-duty trucks.
An attractive partner for such a move would be Nikola (NASDAQ:NKLA), the zero-emissions vehicle production company that just went public in June. The company makes Nikola One and Nikola Two electric semi-trucks.
But Plug Power isn’t looking just at Nikola. There are four potential manufacturing partners in talks with Plug Power, according to CEO Andrew March.
“It’s probably early next year, mid next year, where the 4 manufacturers we’re working with for scale manufacturing, we expect to have an announcement. It’s possible, quite honestly, that there could be one a good deal sooner than that. We expect to be putting vehicles on the road at small scale this year…so the business is evolving and growing.”
The Bottom Line
Growing production capacity and two solid revenue opportunities – the expansion of the big-box fork lift fleet and a potential partnership with big truck manufacturers – gives PLUG stock investors a lot to cheer in 2020.
The analysts are right. Plug Power stock is a buy.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders. As of this writing, he did not hold a position in any of the aforementioned securities.