Appetite for Risk? Ballard Should Be On Your Radar Screen

|
 |  About: Ballard Power Systems, Inc. (BLDP)
by: Hilary Kramer

On April 14th, I blogged about Ballard Power Systems (NASDAQ:BLDP), the leading manufacturer of zero-emission proton exchange membrane fuel cells. As I described earlier, this is a scientific sounding term for fuel cells that can power cars and even plants without any polluting emissions. As I said in my blog in April, this is not a household word or item yet, but as our world looks to green tech to solve issues involving global warming and a sustainable future on this planet, Ballard is in the right field early on.

To me, the company who is doing the right thing in the right field first is the company that can potentially be the big winner, and though it is always a risk for the investor, it might just pay off in spades.

In April when I blogged about it, revenues were down, but so were losses. The company had just extended its contract to provide fuel-cell buses in Europe, and had obtained demonstration commissions for fuel-cell technology in California, British Columbia, and China; it also had a strong position providing residential power in Japan. That said, Ballard was still losing money.

Today, their numbers are still bad, and Ballard’s stock is still floundering. But as a leader in fuel cell tech, I think this is a worthwhile bet, if you can stomach the risk. Its 2nd quarter results, announced the last week in July, were strong. This most likely reflected the fact that Ballard began shipping early prototypes of its next generation Mark 1100 automotive fuel cell and electric drive products to test and integrate with its alliance partners, DaimlerChrysler AG and Ford Motor Company. With every car company jealously eyeing the hybrid successes of Toyota and Honda, there could be plenty of revenues for Ballard in the future.

Ballard’s motto is The Power to Change the World®. Its fuel cells are being showcased not just for their applications in powering cars, but buses, heating hot water, providing heat and electricity to the home. Ballard Power Systems’ strategic alliances with DaimlerChrysler AG (DCX) and Ford Motor Company (NYSE:F), proves that these "Big Three" car companies see the writing on the wall with rising gas prices, and want to get into alternatively powered cars. They may just be right with this green tech, and you might be into something that could pay back big time

Type of stock: A small-cap growth stock in the alternative energy sector, Ballard is all about fuel cell tech. The future is uncertain, its numbers aren’t strong, but if the world adopts its green technology, this company will fly high.

Price target:
The stock is now at $5.88. If you are willing to accept the risk, this is a great price for something that might accelerate in the upcoming years and which could easily double back to where it once was -- but the stock could also go to zero if another technology passes it by. Tread carefully and know this is real risk capital.