The US clean energy industry has been getting significant investor attention since Biden’s win in the U.S. election. It is expected that under a Biden administration, the United States will rejoin the Paris Accord United Nations climate change agreement to reduce greenhouse gas emissions. The new administration is also expected to invest significantly in clean energy infrastructure. And hydrogen energy is an important part of that.
Hydrogen fuel cell systems are being touted as the newest wave in the renewable energy space. Hydrogen fuel-cell vehicle sales accelerated impressively in 2019 and in early 2020. And the demand is expected to keep rising over the long-run, driven by the use of hydrogen as a transportation fuel, and fuel for residential and commercial buildings.
Under a Biden administration, the United States will likely see significant investments in hydrogen infrastructure over the next decade. As a result, hydrogen fuel cell companies like Plug Power, Inc. (PLUG), Air Products and Chemicals, Inc. (APD) and Cummins Inc. (CMI) could hit new highs.
Plug Power, Inc. (PLUG)
PLUG is a leading provider of hydrogen fuel cell turnkey solutions and fuel processing technologies for the electric mobility and stationary power markets, operating in North America and Europe. The company provides its services to manufacturing businesses and retail-distribution through manufacturers, dealers, and direct sales force.
On October 22nd, PLUG announced the expansion of its GenDrive product with three new fuel solutions for the European market. This product development will support their growing European customer base.
PLUG recently announced a Memorandum of Understanding (MoU) with Linde for demonstrating Plug Power’s ProGen Fuel Cell engine in class 6 and class 8 vehicles, which are expected to hit the market by early 2021.
The company entered into strategic partnerships with Brookfield Energy and Apex Clean Energy to source renewable electricity and build liquid green hydrogen plants. These collaborations will help PLUG achieve its long-term sustainable energy goal.
PLUG’s revenue increased 79.9% year-over-year to $106.99 million in the third quarter that ended September 2020. Gross billings rose 73.4% sequentially to $125.60 million.
The consensus EPS estimate for the next year indicates a 25.8% improvement from the year-ago value. The consensus revenue estimate of $438.73 million for the next year indicates 37.3% growth from the same period last year. The stock has gained 627.2% so far year-to-date.
How does PLUG stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
A for Overall POWR Rating.
The stock is also ranked #6 out of 59 stocks in the Industrial – Equipment group.
Air Products and Chemicals, Inc. (APD)
APD designs and manufactures equipment for air separation, and provides them for the production or processing of gases.
APD recently partnered with European Clean Hydrogen Alliance to accelerate Europe’s transition towards a sustainable economy. This will establish APD as a global supplier of hydrogen to refineries.
APD’s sales increased slightly year-over-year to $2.30 billion in the fiscal fourth quarter that ended September 2020. Adjusted EBITDA under the EMEA segment increased 4% to $200 million.
The consensus EPS estimate of $2.18 for the current quarter ending December 2020 indicates a 1.9% improvement year-over-year. The consensus revenue estimate of $2.34 billion for the current quarter indicates 3.9% growth from the same period last year. The stock has gained 13.3% year-to-date.
APD has an “A” in Industry Rank and a “B” in Trade Grade in our POWR Ratings system. In the 69-stock Chemicals industry, it is ranked #20.
Cummins Inc. (CMI)
CMI designs, manufactures, and distributes diesel and natural gas engines and products. The company operates through five segments – Engine, Distribution, Components, Power Systems, and New Power. It provides emission solutions and turbochargers to manufacturers, distributors, dealers and customers, worldwide.
CMI has recently received two grants from the U.S. Department of Energy to help pay for a Class 8 fuel cell truck that it is building with partner Navistar Inc. The company expects to generate $400 million in revenues from hydrogen-making electrolyzers by 2025.
On November 16th, CMI announced its plan to continue investing in fuel cell and hydrogen production technology to bolster its leadership position in the global clean energy industry. The company expects to meet its growing demand for electrolyzers by investing in new technologies, such as solid oxide fuel cells.
CMI’s net sales increased 32.9% sequentially to $5.12 billion in the third quarter that ended September 2020. Cash flow from operating activities increased 8.9% year-over-year to $1.22 billion. Operating income rose 99.4% sequentially to $670 million, while EPS grew 81.3% to $3.39 over the same period.
The consensus EPS estimate of $13.54 for the next year indicates a 20.8% improvement year-over-year. Moreover, CMI beat the street EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $21.26 billion for the next year indicates an 11.2% growth from the same period last year. The stock has gained 29.1% year-to-date.
CMI’s promising outlook is reflected in its POWR Ratings system. It is rated a “Strong Buy” with an “A” in Trade Grade and Buy & Hold Grade, and a “B” in Peer Grade and Industry Rank. Out of 51 stocks in the Auto parts industry, it’s ranked #1.
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PLUG shares were trading at $23.38 per share on Wednesday afternoon, up $0.40 (+1.74%). Year-to-date, PLUG has gained 639.87%, versus a 12.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More…
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