Why FuelCell Looks Destined For Further Gains

Mar.28.14 | About: FuelCell Energy, (FCEL)


FuelCell Energy plies its trade in a rapidly growing market.

FuelCell is rapidly lowering its backlog, and building more plants across the globe.

FuelCell’s partnership with POSCO has been a key driver so far and should help it perform well in the future.

Global fuel cell power company FuelCell Energy (NASDAQ:FCEL) has delivered eye-popping gains of almost 75% this year. Investors who have bet on the future of fuel cell technology have profited big time from this stock, but this isn't the end of this terrific run. The fuel cell industry is just starting off and is expected to grow at a CAGR of 22% during 2014-2020, according to Reportlinker.com. Hence, investors can expect even better times from FuelCell Energy as it looks poised for solid long-term gains.

Making operations efficient

FuelCell is taking measures to clear operations and backlogs as it is working on improving activity levels. FuelCell is confident about performing well in the future as some of its programs are in the last stage of closure. FuelCell is looking forward to its upcoming multi-megawatt projects, while it is also focusing on clearing its backlogs. FuelCell has managed to bring down some of its backlogs, such as service backlogs and advanced technology backlogs, to some extent as compared to last year.

FuelCell is focusing on improving the quality and operations in its manufacturing units. It has implemented the use of automated laser weld cell, which is faster than plasma welding and results in lower costs and faster work. FuelCell expects strong performance from its manufacturing facilities in North America. Further, the company has proved its efficiency with the on-time completion 14.9 megawatt Bridgeport fuel cell park, delivering clean, baseload power to the Connecticut grid. The success of this park has attracted many investors in Connecticut.

Finding traction across the world

FuelCell Energy is seeing good growth in its operations as it has completed two large high-profile fuel cell parks in North America and Asia. In addition, the company is focusing on becoming profitable with different strategies in place.

For example, FuelCell's South Korean partner, POSCO, is working on the construction of a manufacturing facility in the region. On the other hand, FuelCell's other associates are working on improving its North American manufacturing facility. As a result of these implementations, FuelCell is expecting lower costs and a higher operating leverage in future.

Further, FuelCell is looking forward to its project in Seoul in South Korea, where it is installing new and renewable power generation plants by using fuel cell components. Also, POSCO will supply seven 2.8 megawatt DFC power plants for a 19.6 megawatt fuel cell park for providing power in Seoul. FuelCell is betting big on South Korea as it is expecting more energy-related policies going forward.

Also, FuelCell is optimistic about its carbon neutral power plant installed at Microsoft's (NASDAQ:MSFT) Data Center Research Project in Cheyenne, Wyoming, which is currently being commissioned. When the plant comes into operation, FuelCell will be able to show that it is efficiently using biogas to power data centers in a sustainable and carbonless manner.

FuelCell is coming up with a number of power plants going forward, including the world's largest fuel cell park, providing 59 megawatts of power through 21 fuel cell plants. In South Korea, its partner POSCO is engaged in building the Pohang facility to add yet another area of growth. In addition, POSCO is working on R&D to find out ways of reducing costs and providing efficient operations.

Also, the company is targeting other markets such as Italy, the U.K., and the Middle East. It is investing in product development activities in Europe in a bid to strengthen its position in the European market, which holds great promise for fuel cell technology. FuelCell is also installing a DFC-H2 facility at its Torrington manufacturing facility, which will provide hydrogen to support its manufacturing processes and help generate high quality heat to support round the clock production of ultra-clean baseload electricity.


As we saw earlier, fuel cell technology is slated to grow at a fast pace in the future and FuelCell Energy is looking to make the most of this opportunity. The company has already increased its presence across the world and is getting more efficient. Hence, investors looking to benefit from the future of energy should definitely consider FuelCell Energy for their portfolio.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.