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Invest in Fuel Cells

Fuel Cells use the chemical energy of hydrogen, or another fuel, to produce electricity in a clean and efficient way. A fuel cell operates like a battery, however, fuel cells do not need recharging nor do they wear down. Because of these advantages, fuel cells have been touted as a superior alternative to combustion engines in the transportation industry.

Fuel Cells are powered with hydrogen and oxygen. Getting oxygen is the easy part, hydrogen however, is anything but. Although hydrogen is the most plentiful element in the known universe it does not occur naturally as gas on Earth and as such must be separated from other elements, most popularly hydrocarbons. Hydrocarbons are organic compounds that contain hydrogen and make up many of our fossil fuels like gasoline, methane, and natural gas. Hydrogen is separated from hydrocarbons by reforming, which is the application of heat.

Reforming natural gas is the most common way to extract hydrogen.

Following a surge in demand for fuel cell stocks in the late 90’s, the fuel cell industry received a major boost with the announcement of the Hydrogen Fuel Initiative of 2003. Released under President George Bush, the program intended to invest $1.7 billion in the development of hydrogen infrastructure and fuel cell technologies over the course of 5 years. The investment initiative was touted as a way for our economy to push toward a cleaner fuel future. However, critics bashed the initiative as a sham due to the need for natural gas, a fossil fuel, for the hydrogen extraction process proving fuel cells that run on hydrogen would in fact not be as “clean” as anticipated.

Electrolysis

This is why another method of hydrogen extraction, electrolysis, has been growing in popularity. Electrolysis is a cleaner alternative to reforming and works by running an electrical current through water separating hydrogen from its oxygen constituent. Though the reforming process has been historically used to separate hydrogen due to reduced cost, advancement in technology and cost-effectiveness has made using electrolysis competitive with reforming.

Despite strides in fuel cell and hydrogen technology, the industry itself has suffered from overpromise and under-delivering. Fuel cell stocks rose and crashed in the late 90’s, rose and crashed in 2013/2014 with the unveiling and overhype of fuel cell vehicles, or FCV’s, by major automakers, and fuel cell companies have seen declining revenues for years.

This does not mean the technology has no future. Fuel cells could have been too early to the party (like 3D printing), yet have a viable use case for the global economy, as obvious in the string of investment in the technology over the last few years.

Major Events

  • In 2014, Toyota (NYSE: TM) unveiled their Mirai, the world’s first mass-market fuel cell vehicle. In 2018, Toyota announced plans to expand upon their fuel cell endeavors by committing to mass manufacture fuel cell stacks by 2020 to hit annual global FCV sales of over 30,000 units.
  • Retail juggernauts Amazon (NASDAQ: AMZN) and Walmart (NYSE: WMT) have broadened their rivalry to include the fuel cell industry. Walmart formed a partnership to develop fuel cell technology with Plug Power back in 2006 and Amazon signed a $600 million deal with the same company in 2017.
  • In 2017, the Hydrogen Council was formed, an initiative involving numerous high-profile corporations who work together to promote hydrogen as a crucial part of energy transition. Companies include: The 3M Company (NYSE: MMM) , Royal Dutch Shell, (NYSE: RDS-A, RDS-B) Big Auto (including Toyota, Honda (NYSE: HMC) , Hyundai, (OTC: HYMTF) and General Motors (NYSE: GM)), Bosch, and The Linde Group.
  • While most “unicorns’ have been in the technology space, the summer of 2018 witnessed the IPO of a rare clean-energy unicorn, Bloom Energy Corp, a manufacturer of fuel cells.

The Future

Even with fuel cells offering high potential, the road to mass adoption will be quite the bumpy one.

For starters, fuel cell vehicles will face stiff competition by the growing electric vehicle industry as EV’s are both more popular and the infrastructure much cheaper. Unlike gasoline and to a much smaller extent electric vehicles, there is currently is no coast to coast large scale hydrogen infrastructure in place to provide easy access to the fuel needed for fuel cells. Some studies say that a single hydrogen station could cost as much as $2 million compared with one EV charging station which costs only $50k. Combine this with the complexities of the hydrogen supply chain and it is fair to understand why Elon Musk himself has coined the use of hydrogen fuel cells as “incredibly dumb” (though his position as CEO of EV company Tesla, NASDAQ: TSLA, could make this comment a little suspect).

The complexities of utilizing hydrogen as a scalable fuel source aside, this hasn’t hindered investment in the fuel cell space as major automakers continue to fund their hydrogen aspirations. It is true fuel cell companies have been fighting a losing battle achieving profitability, but increasing interest, continued investment, and major deals such as the one outlined above could further solidify the global footprint of fuel cells as we continue through the 2020’s.

Japan was looking forward to showcasing their hydrogen economy during the 2020 Olympics, but due to the COVID-19 pandemic, the world will have to wait until the summer of 2021 to see the countries hydrogen vision.

Fuel Cell Stocks

Industry: Electrical Equipment & Parts

Sector: Industrials

Website: http://www.fuelcellenergy.com

Description: FuelCell Energy, Inc., together with its subsidiaries, designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed power generation. The company offers SureSource product line based on carbonate fuel cell technology in various configurations, including on-site power, utility grid support, distributed hydrogen, and micro-grid, as well as multi-megawatt applications; and SureSource Recovery power plants for natural gas pipeline applications. It also provides SureSource Capture system that separates carbon dioxide from the flue gases of natural gas, biomass, or coal-fired power plants, as well as industrial facilities; and SOFC/SOEC and Energy Storage, a solution for energy storage using solid oxide technology. The company’s SureSource power plants generate electricity and usable heat. It serves various markets, such as utilities and independent power producers, industrial and process applications, education and health care, data centers and communication, wastewater treatment, government, and commercial and hospitality. The company primarily operates in the United States, South Korea, England, and Germany. FuelCell Energy, Inc. was founded in 1969 and is headquartered in Danbury, Connecticut.

Fundamentals
Market cap$4.14B
P/E ratio
Earnings per share$ -0.40
Return on equity-37.09%
Profit margin-136.60%
Total revenue$69.48M
Debt / Equity25.95
Price / Book12.63
52 week high$29.44
52 week low$1.45
Shares outstanding$322.43M
Previous close$12.75
Dividend Analysis
Dividend yield0.00%
Payout ratio0.00%
Trailing Annual Dividend Rate$
Five Year Avg Dividend Yield0.00%
Ex-Dividend date0

Industry: Electrical Equipment & Parts

Sector: Industrials

Website: http://www.plugpower.com

Description: Plug Power Inc. provides hydrogen fuel cell turnkey solutions for the electric mobility and stationary power markets in North America and Europe. It focuses on proton exchange membrane (PEM) fuel cell and fuel processing technologies, fuel cell/battery hybrid technologies, and related hydrogen storage and dispensing infrastructure. The company offers GenDrive, a hydrogen fueled PEM fuel cell system that provides power to material handling electric vehicles; GenFuel, a hydrogen fueling delivery, generation, storage, and dispensing system; GenCare, an ongoing maintenance and service program for GenDrive and GenSure fuel cells, GenFuel products, and ProGen engines; and GenSure, a stationary fuel cell solution that provides modular PEM fuel cell power to support the backup and grid-support power requirements of the telecommunications, transportation, and utility sectors. It also provides GenKey, a turn-key solution for transitioning to fuel cell power; and ProGen, a fuel cell stack and engine technology used in mobility and stationary fuel cell systems, and as engines in electric delivery vans. The company offers its products to retail-distribution and manufacturing businesses through direct product sales force, original equipment manufacturers, and dealer networks. Plug Power Inc. was founded in 1997 and is headquartered in Latham, New York.

Fundamentals
Market cap$19.09B
P/E ratio
Earnings per share$ -1.58
Return on equity-68.42%
Profit margin0.00%
Total revenue$-100.47M
Debt / Equity47.48
Price / Book9.84
52 week high$75.49
52 week low$3.70
Shares outstanding$589.68M
Previous close$31.96
Dividend Analysis
Dividend yield0.00%
Payout ratio0.00%
Trailing Annual Dividend Rate$
Five Year Avg Dividend Yield0.00%
Ex-Dividend date0

Industry: Specialty Industrial Machinery

Sector: Industrials

Website: http://www.ballard.com

Description: Ballard Power Systems Inc. engages in the design, development, manufacture, sale, and service of proton exchange membrane fuel cell products. The company offers heavy duty modules, fuel cell stacks, backup power systems, and portable power/ unmanned aerial vehicles (UAV), and material handling products. It also provides technology solutions comprising engineering services and technology transfer services, as well as licenses and sells intellectual property portfolio and fundamental knowledge for various fuel cell applications. The company serves transit bus, automotive, rail, truck, material handling, UAV, marine, and critical infrastructure markets. The company markets its products in China, Germany, the United States, Belgium, the United Kingdom, Japan, Denmark, Canada, Norway, Switzerland, France, Taiwan, the Netherlands, Finland, Spain, and internationally. Ballard Power Systems Inc. was founded in 1979 and is headquartered in Burnaby, Canada.

Fundamentals
Market cap$7.20B
P/E ratio
Earnings per share$ -0.21
Return on equity-8.59%
Profit margin-49.46%
Total revenue$1.98
Debt / Equity7.56
Price / Book14.17
52 week high$42.28
52 week low$8.72
Shares outstanding$297.09M
Previous close$23.26
Dividend Analysis
Dividend yield0.00%
Payout ratio0.00%
Trailing Annual Dividend Rate$
Five Year Avg Dividend Yield0.00%
Ex-Dividend date0

Industry: Electrical Equipment & Parts

Sector: Industrials

Website: http://www.bloomenergy.com

Description: Bloom Energy Corporation designs, manufactures, and sells solid-oxide fuel cell systems for on-site power generation. It offers Bloom Energy Server, a stationary power generation platform that converts standard low-pressure natural gas, biogas, or hydrogen into electricity through an electrochemical process without combustion. The company serves banking and financial services, cloud services, technology and data centers, communications and media, consumer packaged goods and consumables, education, government, healthcare, hospitality, logistics, manufacturing, real estate, retail, and utilities industries. It primarily operates in the United States, Japan, China, India, and the Republic of Korea. The company was formerly known as Ion America Corp. and changed its name to Bloom Energy Corporation in September 2006. Bloom Energy Corporation was founded in 2001 and is headquartered in San Jose, California.

Fundamentals
Market cap$4.36B
P/E ratio
Earnings per share$ -1.14
Return on equity0.00%
Profit margin-19.84%
Total revenue$794.25M
Debt / Equity657.52
Price / Book54.09
52 week high$44.95
52 week low$5.71
Shares outstanding$144.15M
Previous close$24.71
Dividend Analysis
Dividend yield0.00%
Payout ratio0.00%
Trailing Annual Dividend Rate$
Five Year Avg Dividend Yield0.00%
Ex-Dividend date0

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