As a leader in the rapidly growing clean energy industry, FuelCell Energy, Inc. (NASDAQ: FCEL) utilizes its proprietary, state-of-the-art fuel cell platforms to enable a world empowered by clean energy. A series of updates from industry peer Plug Power (NASDAQ: PLUG) resulted in a dramatic revenue increase which created a sympathy play for other clean energy stocks such as FCEL. The stock has been on a major run and had another 11% increase at market open on October 18th as momentum builds for another push.
Clean energy stocks have become a hot topic recently, but FCEL has seen a surge of interest thanks to retail investors as it started trending across social media and investment platforms. The stock reached an all time high of $29.44 during a previous run in February and FinTwit investors have been eager to maintain the momentum to break its current resistance. Another catalyst has been FCEL’s short squeeze potential with 56,160,000 shares sold short as of September 30th. But on October 14th, XR Securities LLC joined other institutions in reducing its short position to only 15,400 shares signaling the shrinking short interest for FCEL.
Before FCEL released its Q3 report, most analysts’ forecasts included a $8 value for the stock, but FCEL has already surpassed that PPS after Monday’s gap up. Witnessing abnormally high levels of volume on October 18th, FCEL beat its 100-day average of 23 million by at least 57 million when volume passed 80 million.
Fundamentally, FCEL has an extensive portfolio from working with the federal government, Department of Energy, the Navy. Major companies like Exxon and Toyota have also worked with FCEL which shows the company’s long-term potential. FCEL also received a boost after SB 155 was signed by California Governor Gavin Newsom in late September. Offering a two-year extension of the Fuel Cell Net Energy Metering program, this relieves those that install fuel cell systems of up to five megawatts from paying charges usually enforced by California’s utilities. Clearly this is a major opportunity for FCEL which can target California’s market of 39.51 million people with their advanced fuel cell systems.
FCEL has seen revenue growth over the last five years, reporting $70.87 million in 2020 – a 16.66% growth in sales from its previous report. However, the company continues to operate at a loss. Nevertheless, FCEL was able to reduce its NOL from $15.3 million in Q3 2020, to $12 million in Q3 2021. Meanwhile, its revenue increased from $18.7 million in Q3 of 2020 to $26.8 million in Q3 of 2021 – constituting an over 40% increase.
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Trading at $8.28 after dipping at market open following significant overbuying the day prior, FCEL shows a resistance at 8.84 and a second at 9.27. Its primary support shows at 8.07 with a secondary support at 7.78. The MACD had a bearish crossover at market open, as the RSI corrects to 48 after overbuying. Meanwhile accumulation has begun falling after spiking on the 18th.
Should You Buy?
Clean energy stocks are clearly an attractive investment opportunity for many and FCEL is an established company with connections to major corporations as well as the government. Given FCEL’s previous highs near $12.33 and $18.90, there’s the potential for further gains if FCEL breaks through its resistance. Fundamentally, FCEL is in a thriving sector but whether it has the revenue or assets to justify a valuation of $20 or $30 is another story. If the momentum continues to build then this relatively low float stock – 366.478 million shares – could keep running. Considering the recent influx in volume, the price may rise as volume usually precedes price. But a dip is to be expected after significant overbuying.
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