While we’re not normally fans of very low-priced stocks, Plug Power (PLUG) has been around for a while, is liquid and is just beginning what looks like a multi-year growth wave thanks to two big drivers, suggests Mike Cintolo, editor of Cabot Top Ten Trader.
The first is its hydrogen fuel cells (hydrogen goes in, electricity is produced, heat and water are the only by-products; it’s greener and cheaper for customers), which are quickly being adopted in a bunch of transportation (30% of the country’s groceries are transported on vehicles that use its fuel cells).
In addition, there’s plenty of growth potential from there) and materials handling uses (forklifts are a giant opportunity, with firms like Walmart, Kroger, Fiat Chrysler and Sysco already customers, and there are millions more forklifts that could be retrofitted).
Beyond that is Plug’s hydrogen infrastructure, which has taken a big leap thanks to its recent buyout of United Hydrogen — Plug is actually the country’s leading consumer of hydrogen, and should fuel cells grow in popularity, it thinks supplying hydrogen to others could eventually be a bigger market than selling fuel cells!
During the next four years, management has a target to grow revenue nearly fivefold while cash flow (EBITDA) expands at a very healthy clip. Don’t invest in the rent money, but Plug looks like an interesting speculation that may finally be turning the corner.
Technically, PLUG broke out from a good-looking four-month base in June and had a quick, powerful, giant-volume advance, lifting from $6 to $10.5 before finally pulling in.
But so far, we’re impressed with the pullback — volume has been drying up, and the depth of the dip certainly isn’t abnormal given the prior run. If you’re game, we think you can start a small position around here.
