Shares of Plug Power (PLUG) have been on a tear since the New Year was rung in, gaining almost 80% in a few short trading days. Shares of Plug Power are up more than 310% since my first bullish article on the company was released back in October, and nearly 100% since my follow up article in December. Congratulations to all longs who jumped in and stayed in. With news of imminent profitability (for the first time in the company's existence), increased bookings, and progress in several new developing markets, it seems that this sleeping giant is just beginning to awake from its 17-year slumber. While many investors would say, "don't be too greedy," or "reduce your risk and trim your position," I would argue, in the words of Jesse Livermore, the famous bear of Wall Street, "money is made by sitting, not trading." It may be hard for some investors to stare at triple digit gains and not pull the trigger, but this is why investors should continue to hold on to their core position of this fuel cell leader.
Fuel Cell Range Extenders
Shares of Plug Power rocketed 11% higher in pre-market trading on Tuesday, breaking the $3 barrier (for the first time in more than two years), thanks to a PR from the company highlighting their recent DOE contract win of $3 million to develop fuel cell range extenders, designed to at least double the driving range of electric vehicle utility trucks, for 20 FedEx (FDX) vehicles. This news release acted solely as confirmation to what was already known to investors for some time, that the company is continuing to expand its product line to meet the needs and provide solutions to different markets, other than their already successful material handling fuel cell market, which they control approximately 90% of. Plug Power is on the verge of providing a compelling value proposition to companies who strive on efficiency, such as FedEx, and the logistics touting delivery company, UPS (UPS). As the company's expansion into the range extender market begins to materialize, more and more customers will begin lining up, with goals of reducing their emissions, reducing their costs, and increasing their productivity. Being able to deliver more goods with less fueling stops is one thing my Uncle, a FedEx driver, would value tremendously.
Transportation Refrigeration Units
Plug Power's expansion into providing fuel cell powered transportation refrigeration units is one more market that the company has been developing for some time, with Sysco (SYY) already testing prototypes in Long Island, NY. CEO Andy Marsh stated on a recent business update that he foresees the fuel cell TRU market ultimately surpassing their already established material handling division, and the company has received a lot of positive feedback and interest from several food distribution companies.
The value proposition for fuel cell powered TRUs is through the roof. The addressable market is expansive, and continuing to grow, expecting to reach $9 billion by 2018. Just about every refrigerated item purchased from your local grocery store (produce, dairy, frozen goods) sat in an 18-wheeler refrigeration unit powered by a loud diesel engine at some point. The current technology is outdated. The diesel engines powering these machines are very loud, inefficient, and costly to refuel. Food distribution giants, such as Sysco, have a lot to benefit from the transition to fuel cell powered TRUs, thanks to their increase in efficiency, and decrease in emissions and noise pollution.
Toyota's Fuel Cell Powered Car
On Monday night at CES 2014, Toyota announced ambitious plans to continue its development of fuel cell powered cars and have them on the road by 2015. While there is no mention of Plug Power providing any solution to Toyota (TM) and their fuel cell prototypes, this acts as a testament that the once overhyped fuel cell industry is making a resurgent comeback, is here to stay, and is ripe for growth. As more and more companies explore the option of utilizing fuel cell powered cars, trucks, and refrigeration units, more and more investors will begin to look at fuel cell providers that would benefit from this increase in business and attention. Toyota's Monday night announcement only adds fuel to the recently rekindled fuel cell fire.
This is just the beginning, the future looks bright and Plug Power is poised to benefit from an increase in attention and awareness of the fuel cell industry. As more and more fortune 500 companies look to reduce their costs and emissions, and increase their productivity and efficiency, more and more companies will be knocking on Plug Power's door, looking for solutions. Upcoming catalysts for Plug Power include a business update on January 14th, another update in February, impending earnings release, and the highly anticipated announcement of adding Amazon and Metro AG to its already impressive list of customers. This now feasible technology is ripe for hockey stick style growth, and patient investors who sit on their position will undoubtedly be rewarded in the short, mid, and long-term future.