FuelCell Energy Inc (NASDAQ: FCEL) is headed for the top in the premarket hours this morning, following up on the strong gains that we saw out of the stock yesterday. With no news or SEC filings acting as the catalyst, many are acting why the stock is headed up. Well, there are plenty of good reasons. Here’s what’s going on:
Skip to What You Want to Read
- Political Changes Are Boosting Clean Energy
- Money Is Flying Into the Fuel Cell Industry
- What Analysts Think About FCEL Stock
- Risks to Consider Before Buying FCEL Stock
- Final Thoughts
Political Changes Are Boosting Clean Energy
FCEL stock has been headed up, but it’s not the only stock in the clean energy space that’s seeing strong gains. The fact of the matter is that if there’s ever been time to invest in clean energy, the time is now.
So, what’s the deal?
The political climate is changing in a big way. Not only did Joe Biden win the United States Presidential Election, the democrats now control the White House, the Congress, and the Senate.
So, what does this have to do with FuelCell Energy? EVERYTHING!
The democrat party has been very clear about its views toward clean energy and climate change. Joe Biden and his cohorts that will soon take over Washington DC believe that regulatory changes need to take place in order to push consumers, businesses, and government agencies toward clean energy.
That bodes well for FCEL.
Moving forward, we’re likely to see tax cuts for those that produce clean energy products as well as those that use them. Moreover, FCEL will likely benefit from grants designed to further research into clean energy alternatives.
Money Is Flying Into the Fuel Cell Industry
Just yesterday, news broke that FuelCell Energy’s largest competitor, Plug Power, will receive a $1.5 billion investment to bring fuel cell technology to Asia. Sure, we’re talking about a competitor here, but it’s also great news for FCEL.
Think about it, massive amounts of investor dollars are now flooding into the industry as a paradigm shift in energy is expected to take place. While Plug Power was the first to receive one of these large investments, I wouldn’t be surprised to see more big money flying around, of which, FCEL will likely take its share.
What Analysts Think About FCEL Stock
According to TipRanks, there are currently four analysts covering FCEL stock. All of the analysts covering the stock rate it a Hold. Price targets range from $11 on the high to $5 on the low.
However, it’s important to keep in mind that all of the analysts covering the stock covered it prior to Joe Biden’s election win and before we knew that the democrat party would take Washington DC. With this news, there’s likely to be upgrades just around the corner for the stock.
Risks to Consider Before Buying FCEL Stock
If you plan on investing in anything, you’re going to have to accept risk. After all, any investment you make will come with risk. When it comes to FCEL stock, some of the most significant risks to consider include:
- The Company Isn’t Making Money. Sure FuelCell Energy does generate revenue through the sale of its products and services. However, the revenue generated isn’t enough to cover expenses. If the company can’t make it to profitability relatively soon, the money on its balance sheet will dry up and it will likely look to capital markets to raise more, leading to dilution and declines.
- A Speculative Play. An investment in FCEL stock is an investment in the idea that a clean energy revolution is coming and that fuel cell technology will play a key role in that revolution. This is a speculative bet that comes with additional risks.
I want to be very clear here. I didn’t write the risk section above to scare you out of an investment in FCEL stock. The fact of the matter is that all investments come with risk and investors should be aware of them before diving in.
With that said, I see FCEL stock as a compelling opportunity. With the paradigm shift that’s likely to take place in the energy space in the years ahead, and the company’s leading edge technology in the fuel cell space, it’s hard to imagine that the stock is going to fall ahead. All in all, FCEL is a stock to watch.