Can Plug Power (PLUG) Keep Surging?

Jacob Harper  |

2013 saw a massive upswing in the clean energy sector, as investor clamored to throw their money into companies associated directly or indirectly with the “green” movement, with upstarts Tesla Motors (TSLA) , Solar City (SCTY) , and Canadian Solar (CSIQ) all notching big, big gains last year.

But perhaps the most interesting clean energy winner has been clean fuel-cell manufacturer Plug Power (PLUG), which has gained 600 percent since 12 months ago and 400 percent since November. Unlike the other green-energy upstarts, Plug Power has a long history — a long unprofitable history.

Unlike the red-hot startups, investors in Plug Power have seen lofty promises come crashing to the ground before. After going public in 1999, shares of Plug Power skyrocketed with the inflation of the Tech Bubble, going north of $1500 a share in mid-2000 before crashing.

And crash hard they did — by 2002 shares were under $100, and declined steadily before dropping below $10 apiece in 2010. By 2012, the company was threatened by NASDAQ with delisting for failing to maintain a dollar a share valuation, and would have been forced to trade over-the-counter.

After years of unprofitability and dismal market performance, Plug Power gave investors two pieces of very good news last year. One, the company CEO announced that in 2014 the company would be profitable for the first time in 16 years. Two, the company announced a partnership with shipping company FedEX (FDX) to outfit the company’s fleet of trucks with electric fuel cells. Shares, in turn, skyrocketed.

Fool me once, shame on you, goes the mantra. called Plug Power a classic “dead cat bounce,” expecting shares to drop significantly in the near future. Indeed, the stock has experienced extreme whipsaw action the last two months, with the high voliltility suggesting investors are less than sure that the company can maintain their rapid rise.

But some analysts seem to like Plug Power’s chances of actually turning things around. Despite the massive price jump, on Feb 3 Cowen analysts reasserted an “outperform” on the stock, expressing their favorable impression of Plug Power’s operations.

If Plug Power can continue riding the governmental goodwill (notably a $3 million Department of Energy good faith loan) and consumer trend that favors green products, the company could continue their ride up. However, excessive market exuberance has certainly worried technical analysts, and as history has shown, we could be merely witnessing the development of the Plug Power Bubble 2.0.

As of late, the market has sided with the bulls. Shares of Plug Power continued their upward momentum, notching an 11.97 percent gain by midday trading to hit $3.18 a share.

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