Once Ballard Power Systems Inc. (NASDAQ:BLDP) is in the black, there’s no telling how fast its stock price could rise
Profit Confidential | September 12, 2017 | SmallCapPower: When it comes to the war between fossil fuels and renewable energies, there are only two opinions worth having.
First, that 50 years from now, future historians will think us foolish for even having this debate, because renewables will have won so completely.
And second, that it will take 20 years for them to realize our stupidity—not 50.
Both options end in the same place: a future where global energy supplies are distributed, renewable, and environmentally friendly.
The market has internalized this information over the last five years, leading to huge gains for high-profile stocks like Tesla Inc (NASDAQ:TSLA). But Tesla stock is only the tip of the iceberg…
Other renewable energy stocks, hidden deep in the haystack of capital markets, are going to profit just as much from these changing conditions.
Our research shows that Ballard Power Systems Inc. (NASDAQ:BLDP) is one such stock.
Not only is it a leader in hydrogen fuel cells, but it’s on the verge of profitability right now. Once Ballard Power Systems is in the black, there’s no telling how fast the stock could rise.
But let’s step back for a moment.
What proof exists to support the claim that renewable energy is inevitable?
Case for Renewable Energy
Each year, the Bloomberg New Energy Finance (BNEF) team issues a report that is must-read analysis for anyone interested in global energy markets.
It is widely anticipated, including a variety of factors that are frequently buried in legalese.
In the past two years, the report has emphasized that lifetime costs for solar power are cheaper than for coal and natural gas. In fact, they have said that solar is on track to become the cheapest form of energy, bar none.
What does this mean?
It means that solar power is not a coddled government industry (anymore). To be sure, the industry does receive subsidies, but those would not be sufficient to eclipse coal or natural gas.
Only the invisible hand of the market could make that possible. And based on the price of solar panels, that is exactly what appears to be happening.
Price movements this drastic do not occur in government-controlled industries. Only the exponential force of technological evolution could drive down prices by the amount shown in the chart above.
And one of the constant truths of markets is that falling prices lead to higher demand. Which is all by way of saying that renewable energy is not in the realm of theory anymore. It is reality.
With that said, let’s take a closer look at Ballard Power Systems stock.
Bullish Case for Ballard Power Stock
In its most recent quarter, Ballard Power Systems made $26.52 million in revenue, up 50% from the same period a year before.
This jump in sales is fast becoming a trend for the Company, with each of the last five quarters reflecting huge year-over-year increases in sales. You can thank China for that growth.
Swamped with pollution, China is looking for transportation solutions that don’t lead to more smog. This has created an exciting opportunity for Ballard Power Systems to supply hydrogen fuel cell solutions.
Cities like Foshan and Yunfu are already scheduled to have 300 fuel cell buses as part of their local transportation system.
Normally, it’s impossible for outside companies to work in China, but there is a loophole. If the outside company—in this case, Ballard Power Systems —partners with a local Chinese company, they gain carte blanche.
So it was an incredibly good sign when Ballard Power Systems entered into a joint venture with Guangdong Nation Synergy Hydrogen Power Technology Co Ltd. It is their key to the entire Chinese market.
But that’s not even the most important takeaway from Ballard’s financials.
What stands out is the operating margin trend line. It is almost at the breakeven point, which suggests that profits are just around the corner.
Considering that Ballard Power Systems has $87.0 million worth of committed orders for 2017 delivery, it should come as no surprise to most investors…but it will.
Ballard Power Systems is still trading cheap compared to its forward potential, despite having surged 52% in the last 12 months. At just $3.28 per share, investors that scoop up BLDP stock today could earn triple-digit gains by this time next year.
Disclosure: The author is not receiving any compensation for writing the article and does not have a business relationship with any company whose stock is mentioned.
Neither any of the principals at SmallCapPower, nor their family members, own shares in any of the companies mentioned above.
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