The previous articles in this series focused on the power costs and operational lifetimes of hydrogen fuel cells. These factors are important, as cheaper and long-lasting fuel cells are vital for the adoption of hydrogen as a fuel. (For details of how these cells work, refer to the first article).

Cost and durability are far from being the only characteristics of fuel cells worth consideration. Here we focus on fuel cell efficiency – this is the proportion of the chemical energy stored within the hydrogen supplied to the fuel cell, that is eventually converted into usable electricity.

The graph shows the efficiency (%) of PEMFCs and ALKFCs separately, against their operational lifetime in hours. The bubble size represents the power costs of each type of cell, with larger bubbles indicating more expensive cells. We have only considered the stationary applications of PEMFCs here, as ALKFCs are currently unsuitable for automotive purposes. A variety of efficiency figures were collected from studies and market reports, which were then assigned the average lifetime and power cost figures for the technology from the previous articles (unless the source offered specific information).  

When electricity is produced in fuel cells, heat and water are produced as by-products. The heat is usually lost as it escapes into the surroundings of the cell. When it can be captured for productive purposes, it increases the efficiency of the system.  This is called combined heat and power (CHP), and is also commonly used when generating electricity with coal or natural gas.  Another common example is the cabin heater in gasoline cars: excess heat from the engine is used to heat the passenger cabin.  Because the heat would otherwise be wasted, using a car’s cabin heat does not hurt its mileage, while using its air conditioner (which cannot use waste heat from the engine), does.

To account for the efficiency boost from captured heat, the figures on the graph have been split by the presence of CHP in the system.

Within usual (non-CHP) ALKFCs, efficiencies are usually between 50-65%, while in PEMFCs the efficiencies range from 45-55%. ALKFCs tend to demonstrate slightly higher efficiencies than PEMFCs on average, and the smaller bubble size shows that they also have lower power costs. However, they are more sensitive to corrosion, and have significantly smaller operational lifetimes. Combined with their larger size, it makes them impractical for several applications, especially automotive. However, ALKFCs retain their utility for some stationary applications like backup power.

Adding CHP systems clearly increases the efficiency. In fact, ALKFCs have been shown to demonstrate nearly 87% efficiency as per one estimate (although this is yet to be seen outside a lab). PEMFCs with CHP have been known to reach nearly 70% efficiency. Not all the output is electricity, however, and CHP systems can only boost efficiency to the extent that the heat produced is actually required.

Since the lifetimes and some power costs were derived from averages, it is difficult to draw correlations between either of these factors and the efficiency from the data. For the CHP PEMFC, the cost was estimated at about $5500/kW from the source, which is about three times the average of $1880/kW. This was largely due to the cost of the additional components to capture the heat energy. Although no such estimate could be drawn for the CHP ALKFCs, it is unlikely that increasing the efficiency would translate into an equally sharp rise in costs. This is because ALKFCs generally operate at higher temperatures than PEMFCs, which means they are naturally capable of providing more usable heat energy.

The efficiency has several implications on fuel cell applications. Batteries such as lithium-ion show significantly higher efficiencies than the fuel cells. So, battery electric vehicles have managed to reach commercial scale whereas hydrogen ones have not, despite the latter having the promise of faster refueling times. However, fuel cells could play an important role in powering large buildings, if their wasted heat is harnessed through CHP systems.

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The first article in this series introduced the two prominent types of hydrogen fuel cells – alkaline fuel cells (ALKFCs) and proton-exchange membrane fuel cells (PEMFCs). Fuel cells are devices that convert stored hydrogen into usable energy, and constitute an essential part of the hydrogen economy. Subsequent articles shall focus on various characteristics of these two cells. 

The graph above shows the power costs ($/kW) of PEMFCs and ALKFCs as the technology has advanced over time. In other words, they show the initial capital cost for every 1 kW of fuel cell  capacity (note that this axis is in the log scale). Ideally, these costs have to be extremely low for fuel cells to rival existing fossil fuel technologies. The bubble size represents the total operational lifetime in hours, which indicates the durability of each technology. This article will discuss the figures for PEMFCs. 

The estimates have been segregated into those for stationary and automotive applications. Stationary systems are bigger, made for more intensive, long-lasting uses and estimated to be produced (on average) at scales that are 25-30 times lesser than those of automotive FCs. All of this is naturally accompanied by a significant increase in prices. Stationary systems use larger “stacks”, or bundles, of fuel cells which also raises their cost.

For automotive PEMFCs, the costs are significantly lower and we see a marked downward trend in costs from 2002 with improvements in the technology. Various innovations have been implemented to overcome the issues associated with PEMFCs – restrictive thermal conditions, constant humidification of the central membrane and expensive catalysts and bipolar plates. For example, Ballard (BLDP) has come up with self-humidifying membranes, Impact Coatings (IMPC.ST) helps produce corrosion-resistant bipolar plates and PlugPower (PLUG) has developed easier cooling and pressurization systems. 

As a result, the current costs of automotive PEMFCs have reached about $40-55/kW. This has brought them nearer to becoming competitive with internal combustion engines (ICEs), which range about $30-35/kW. 

The lifetime refers to the number of hours a fuel cell operates while still delivering satisfactory performance. This is an indicator of the durability of the cell, which should be as high as possible. Automotive PEMFCs currently exhibit lifetimes between 2500-4000 hours. This is about 60-80% of the lifetime of an average ICE, implying that significant technological improvements in durability remain necessary. Automotive PEMFCs usually face greater challenges with durability as the start-stop motion of cars stresses their membrane.

Within stationary PEMFCs, there appears to have been a surprisingly upward trend in the power costs over time.  This can be partially explained by their constantly increasing sophistication. However, different estimates have different scopes – they may choose to include or exclude installation, electricity and balance of plant costs, and assume different scales of production in the overall figures.  Alternatively, early estimates may simply have been too optimistic.

 On average, the power cost for stationary PEMFCs is roughly $1900-2000/kW. This is much higher than diesel-based  generator systems, which cost about $450-1200/kW. Their operational lifetimes are about 40000 hours – far higher than automotive PEMFCs, as they are designed for nearly continuous use with infrequent replacement. 

PEMFCs are still some way from being adaptable on a large-scale worldwide, and replacing ICEs. High power costs and relatively low durability are key barriers for both automotive and stationary applications, but constant efforts persist to bring them up to par with existing technologies. 

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The previous article in this series on hydrogen fuel-cells focused on proton-exchange membranes fuel cells (PEMFCs). These cells have been the interest of the industry in recent years, and make up the majority of the market. However, it is also worth discussing alkaline fuel cells (ALKFCs), an older variety of cells that remain prominent today. (For details on how these cells work, refer to the first article in this series).

The graph shows the power costs ($/kW) of PEMFCs and ALKFCs as the technology has advanced over time. In other words, it plots the initial capital cost for every 1 kW of fuel cell capacity (note that the cost axis is in the log scale). The bubble size represents the total operational lifetime in hours, with larger bubbles indicating more durable fuel cells.

ALKFC costs have remained under $1000 per kW for the most part (the outlier was a cost projection not accounting for scale). However, industry focus has shifted away from these cells in recent years, due to their numerous issues – their electrolyte gets “poisoned” by carbon dioxide so all supplied gases must be purified, their parts get corroded easily and their large size inhibits use in automobiles. 

As a result, ALKFCs tend to have far lesser durability than stationary PEMFCs. This is apparent in the graph – the average operational lifetime of ALKFCs (~6500-8000 hours) is about 5-7 times shorter than that of stationary PEMFCs. Comparison to automotive PEMFCs is redundant due to the added stress these cells face during their use. 

Despite this, ALKFCs do have value for many stationary applications, including charging EVs and off-grid power in remote locations. Unlike PEMFCs, they do not require rigid temperature bands for operation, and can even operate at sub-zero temperatures. They have also demonstrated very high electrical efficiencies of up to 70%. Firms like AFC Energy (AFC.L) and GenCell have introduced features for improving ALKFCs, such as tolerance for impurities in hydrogen and oxygen and the use of “anionic exchange membranes” to increase the power supply. 

ALKFCs fall behind PEMFCs in their level of technological sophistication, and focused research and development is needed to bring them up to par. They need to be made cheaper, more compact and long-lasting, while retaining their high efficiencies, to fully unlock their potential in the fuel cell market. 

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Fuel cell technology is vital to building the hydrogen economy. Fuel cells combine hydrogen and oxygen into water, while generating a current and some heat energy. Thus, they are used to retrieve stored energy from hydrogen as electricity in large-scale stationary applications, and convert hydrogen fuel to power in automobiles. 

This article introduces a series on fuel cell technologies which will explore the various technologies, the efforts and challenges to improving them, and their prospects for wide-spread adoption.

There are a range of fuel cell technologies. The two most prominent are alkaline fuel cells (ALKFC) and proton exchange membrane fuel cells (PEMFC). 

ALKFCs were the earliest fuel cells, and have been used for several applications, from off-grid power for mining operations to spacecraft at NASA. They comprise two electrodes that contain catalysts, immersed in a liquid electrolyte (usually potassium hydroxide). Hydrogen and oxygen are supplied to either of the electrodes, and the catalyst causes the hydrogen to split into hydrogen ions (also called protons) and electrons. The ions transfer to the other electrode via the electrolyte, and combine with oxygen to form water. The electrons are made to transfer between the electrodes through an external pathway, thus generating a current.

PEMFCs do not utilize an electrolyte. They are composed of two platinum layers, separated by a thin membrane. The platinum layers are catalysts, which are in turn surrounded by gas diffusion layers (GDL) and bipolar plates. Hydrogen and oxygen are supplied to the bipolar plates, and transfer through the GDL to the platinum catalysts. Similar to ALKFCs, hydrogen splits into ions (protons) and electrons. The protons permeate through the membrane and combine with oxygen to form water, while the electrons are collected by the bipolar plate and made to generate a current. Individual PEM cells are too small to satiate most power requirements, and are bundled into larger units called “stacks”.

One notable difference between the two cells is that PEMFCs are far more compact than ALKFCs, due to the absence of a liquid electrolyte and their layered, plate structure. So, they are preferred for use in automobiles, which have limited space. However, research continues into the production of newer kinds of ALKFCs that could bridge this gap. For instance, metal hydride fuel cells are capable of storing hydrogen fuel as part of the system, making them more space-efficient. 

The next two articles in this series will focus on the costs and other characteristics of PEMFCs and ALKFCs. 

The post Introduction to Fuel Cell Technologies appeared first on Alternative Energy Stocks.

by Debra Fiakas, CFA

Hydrogen system developer McPhy Energy SA (MCPHY: PA) recently reported impressive sales growth in the first half of 2019  –  23% higher than last year.    Sales were boosted by delivery of a refueling station in Houdain, France for a bus operation that is 100% powered by hydrogen.  New orders for projects in Germany, Bangladesh and Switzerland will keeps the company busy in the month ahead installing additional hydrogen fueling stations and electrolysis equipment for hydrogen production.

Despite the success, McPhy has not achieved profitability.  Thus the company remains dependent upon financing to support operations.  In 2017, the company secured an equity sales agreement with Kepler Cheuvreux that allows McPhy management discretion over the timing and amount of common stock sales.  The company recently sold 14.7 million shares for Euro $1.8 million (US$2.0 million).

Why are the Kepler Cheuvreux principals willing to hand out capital to a fledgling developer of hydrogen refueling stations?

Hydrogen is appealing in its simplicity  –  an element composed of one atom with one proton and one electron.  It contains a large amount of energy in its chemical bond that gives it value as an energy carrier. 

Despite being the most plentiful element in the universe, hydrogen cannot be found on its own.  It is usually hiding out in combination with other elements to make some sort of compound.  Water is one example  –  two atoms of hydrogen linked together with one atom of oxygen.  Just like the name suggests, hydrocarbon is another hydrogen hangout.  For example, methane is one atom of carbon and four hydrogen atoms and propane is three of carbon and eight of hydrogen.

One way to get hydrogen out on its own is ‘reforming’ the compounds where hydrogen hides out.   Reforming is a high temperature process where steam reacts with a hydrocarbon fuel such as natural gas or gasified coal, knocking out the hydrogen atoms from the carbon.  Gasified biomass can be used as well, but nearly all hydrogen supplies today are produced from natural gas.

An alternative to reforming carbon-intensive natural gas, is electrolysis.  Water molecules are charged with an electric current that strips away the two hydrogen atoms from the oxygen.  Unlike many industrial processes that spew out toxic emissions, hydrogen electrolysis has one rather benign by-product  –  oxygen gas.

McPhy Energy has some experience with this method with its lines of electrolyzers sold under the Piel and McLyzer brands.  These electrolyzers feature alkaline electrolysis with two electrodes operating in a liquid alkaline electrolyte solution of potassium hydroxide and sodium hydroxide.

McPhy Energy makes hydrogen electrolyzers for industrial applications as well as for fuel cells that can power vehicles.  Fuel cells are like fancy batteries, producing electricity without combustion or emissions.  However, fuel cells do not need to be recharged.  As long as the fuel cell is supplied with hydrogen and oxygen it will generate electricity.

Fuel cell-powered cars have similar power and driving range as cars powered by combustion engines, but only water drips out of the tailpipe  –  no carbon emissions.  Indeed, vehicles powered with hydrogen fuel cells emit 50% less carbon dioxide if the hydrogen is made by reforming natural gas.  If the hydrogen comes from hydrogen made by renewable energy such as wind or solar power, the fuel cells have a 90% smaller carbon footprint.

One of the appeals of hydrogen fuel cell powered vehicles is that the refueling process is similar to filling up with gas.  Thus neither transportation infrastructure nor travel habits need be changed a great deal.  Car owners can still count on the pit stop for chips and soft drinks!  Travelers will need to buy super size treats as the fuel cell-powered car does not have to be refueled as often as the conventional combustion engine car.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 8/20/19 as “Super-size with Hydrogen”.

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UQM Technologies (UQM:  NYSE) has agreed to be acquired by Danfoss Power Solutions for $1.71 per share in cash, providing a deal value near $100 million.  UQM leadership expects timely review by government authorities and has recommended approval of the deal by shareholders.  A date has not been set for the required shareholder vote.  Assuming all goes according to schedule, a deal closing is possible sometime in the second quarter 2019.

Electric propulsion and generation technologies are at the core of UQM’s solutions for manufacturing, transportation and power industries.  The substitution of electric motors for combustion engines has been driving demand for the UQM’s products.  Market opportunities have abounded for UQM and the world economy attempts to wean itself off environmentally damaging fossil fuels.  The company has reported steady increases in sales for the last five years, mushrooming to $10.9 million in the twelve months ending September 2018.

Some UQM shareholders may find inadequate the offer of $1.71 per share. During a conference call held with shareholders to discuss the Danfoss offer, UQM management cited competitive concerns as the primary reason behind the decision to accept the offer.  Demand conditions are excellent but the team sounded a practical caution on the challenges of capturing market share for a small company strong on technology and light on market access.

As rosy as the market opportunity might look, UQM’s management team know they are in a game for big boys and girls.  The market for motors, generators and compressors has matured to the point it is dominated by large manufacturers.  Customers are accustomed to choosing from extended product lines and receiving attention from worldwide networks of sales and service personnel.   Let’s not forget the confidence-building impression the plump balance sheet of a large company can make on customers ordering mission critical equipment.  UQM may have exceptional technology needed for adopting fuel cell technology or hybrid electric power systems, but it lacks the girth of its better established competitors.

The UQM-Danfoss tie-up is also not the first strategic move in the industry. In July 2017, automotive components supplier BorgWarner (BWA:  NYSE)snapped up one of UQM’s competitors, Sevcon, for $200 million.  Sevcon’s propulsion solutions encompassed conventional combustion systems as well as electric and hybrid systems.  A supplier of components to OEMs, Meritor, Inc. (MTOR:  NYSE), made a strategic investment in TransPower to gain access to Transpower’s electrification technologies for large commercial vehicles.  Deals are being made and those that are left out could find competition with the new combinations composed of ‘small company technology’ and ‘large company market reach’ more and more challenging.

UQM Technologies reported a net loss of $6.8 million on the $10.9 million in revenue for the last reported twelve months.  Cash usage during that period was $5.4 million, making it clear the company still needs outside financial support to keep the doors open and lights on.  Marketing and sales campaigns require investment, not to mention the working capital to fulfill orders.  The reality of the company’s situation is that to get a bite of the evolving electric propulsion and power generation market, UQM would require some sort of dilutive capital raise.  A strategic deal provides an interesting alternative to a financing, but retaining control might have also cost UQM shareholders dearly in the form of commissions or shared profits.

In comparison to the alternatives, at $1.71 per share UQM holders may be getting something close to fair value. The analysis may make some sense, but it does not take the sting out of the fact that after bearing the risks of an unprofitable company, UQM holders are getting shut out of the company’s future.  Danfoss Power Solutions, a part of privately held Danfoss Group, is swallowing up UQM Technologies in an all-cash deal.

The deal is likely to be successful, delivering strong sales for Danfoss. UQM’s fuel cell compressor system and all its other products will take a place in the Danfoss portfolio of hydraulic and electronic systems that are mostly marketed to off-highway vehicle markets.  Adding the UQM technology will give Danfoss a better position with manufacturers of electric buses and trucks.

The deal will also help Danfoss burnish its reputation as a ‘green’ company.  The company’s 2017 Sustainability Report provides a view on Danfoss goals to operate responsibly, an image which has to help in conversations with electric bus and truck manufacturers who needs to reduce carbon and increase energy efficiency in their supply chains.

So there it is. UQM holders are most likely than not to get a check for $1.71 per share.  We note that for most it might be a celebration.  Over the last eighteen years, the greatest volume is at prices near below $1.00.   Looking at trades in the most recent five years, we observe that the majority were at prices below $0.60.  However, in the last twelve months things have looked rosier for UQM Technologies and we find significant historic trading volumes at the $1.00 price level and $1.35.  Even for those who may have grabbed some shares at the 52-week high price of $1.66, Danfoss is offering a nickel gain.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 1/22/19 as “Shareholders Cry Foul as UQM Agrees to Buyout.” 

The post Shareholders Cry Foul as UQM Agrees to Buyout appeared first on Alternative Energy Stocks.

Fuel cell stocks are publicly traded companies whose business involves fuel cells, devices for efficiently converting the energy in a fuel (often hydrogen) directly into electricity by chemical means, without combustion. Applications include road transport, large-scale energy storage and short-haul transport such as forklifts.

This list was last updated on 5/6/2021

If you know of any fuel cell stock that is not listed here and should be, please let us know by leaving a comment. Also for stocks in the list that you think should be removed.

The post List of Fuel Cell Stocks appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

Fuel cell developer SFC Energy, A.G. (F3C.DE) recently came calling on money managers in New York City.  The company’s chief financial officer Steffen Schneider wants U.S. investors to know SFC has more going for it than simple fuel cells.  True enough the company sells fuel cell components, but it is also capable of delivering complete off-grid energy solutions and integrating full systems.

Schneider talks up SFC’s sterling customer list, including Volkswagen, Siemens, Schlumberger, Shell Oil, Arch Coal, Conoco-Phillips, and other industrial users.  Then there are government agencies such as NATO, the FBI in the U.S. and the Israeli military as well as SFC’s home country of Germany.  It appears customers have been doing more than just sampling.  Over the last five years sales have increased four times, reaching Euro53.6 in fiscal year 2014.  That translated to about US$75.0 million at currency rates at the end of the year.

A little over half of SFC’s business is with customers in the oil and gas industry, where production and distribution facilities are often located far away from electrical grid connections.  Local energy sources are vital for power controls, data acquisition equipment and other mission critical systems.  Harsh weather conditions often preclude the effective use of solar or fossil fuels.  SFC estimates the opportunity for off-grid oil and gas facility power sources is valued at US$11.5 billion, of which US3.7 billion in located in the U.S.

Other industries need power in remote locations as well, such as telecommunications, agriculture and agriculture.  Wind and solar energy producers also need power solutions for facility control functions.  Then there are the remote activities of the military and law enforcement where power is need for communications, computing and monitoring equipment.  SFC is prepared to build custom engineered solutions, but some customers can choose standard units such as the EFOY ProEnergyBox or EFOY ProCube.  There are also the EMILY and JENNY mobile solutions that give the military or government agencies lightweight and reliable energy packs for personnel deployed in remote locations.   The military and industrial markets represent just over a third of total sales.

The balance or about 8% of total sales is to consumers.  There is growing demand for power sources for recreational vehicles, boats or homes located far away from power lines.  SFC offers standard solutions it calls the EFOY Comfort and EFOY GO to provide lightweight, portable units for on-demand power.

SFC stands out among fuel cell developers.  The company’s fuel cells use direct methane technology rather than relying on hydrogen reformed from natural gas.  SFC says this feature improves the return in investment for their fuel cell solutions, since methane is easier and cheaper to handle than hydrogen.

Besides its product technology SFC has been shrewd about its competitive positioning, using acquisitions to bolt on complementary technologies to further distinguish its power solutions.  In 2013, SFC acquired Simark Controls Ltd., a provider of instrumentation, automation power solutions for the oil and gas industry.  Based in Calgary, Alberta, Simark is well entrenched in Canada’s oil and gas industry.  Its rich experience in custom engineering is now giving SFC an edge in pitching customers in the oil and gas industry.  In 2011, the PBF Group B.V. was acquired for its electronics technology that has been critical in helping SFC properly integrate its fuel cells into established conventional electronics infrastructure and devices.
 
SFC has not been as successful in building profits as it has sales.  The gross profit margin has shrunk to 29.2% in 2014 from 39.1% just two years earlier.  Unfortunately, the trend has continued in the first half of 2015.  The company has yet to achieve profitability, but generated positive cash earnings in 2014, as measured by EBITDA.  The company had US$4.3 million in cash on its balance sheet at the end of June 2015, and US$11.6 million in working capital to support operations.

U.S. investors who have an interest SFC will need to acquire shares on a Germany’s Frankfurt exchange.  SFC has not registered its shares in the U.S.  That should not be a particular problem for the investor who is willing to do a bit of work.  SFC Energy is fully reporting, providing German authorities with the same sort of disclosures required in the U.S.  SFC Energy even provides English translations of its financial reports on the corporate website.  For U.S. investors an interesting feature of European financial reports is the Forecast Report section, which details management’s projects for the next fiscal year sales and earnings.
Shares of SFC Energy have drifted down over the last year after experiencing a dramatic increase in value in 2014.  The stock fell through its 50-day moving average near the beginning of the current year and has failed to lift above it since.  Dwindling trading volume suggests that the current weakness in the stock has been more the result of limited demand rather than a rush to the exits. 

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

The post SFC Energy: Growing Remote Power appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

Last week I was surprised to find FuelCell Energy (FCEL:  Nasdaq) on a list of companies registering a particularly bullish technical formation called an ‘Aroon’ indicator.  This measure that is designed to reveal stocks entering a new, decisive trend.  Shares of this fuel cell technology developer and producer had been in a steady decline through most of the year 2014, reaching a 52-week low price of $1.05 in January 2015.  However, since then FCEL has regained 27% from that low point.

Source:  Stockcharts.com
 
The turn in fortunes seemed to coincide with an announcement commemorating one year of operation at a fuel cell park operated by Dominion Power (D:  NYSE) using five of FuelCell’s Direct FuelCell power plants.  Dominion produces 14.9 megawatts from the installation, which is sufficient to power 15,000 homes.  A heat recovery element adds to the efficiency of the plant.  Then again it must be noted that several of the major small-cap indices such as the S&P 600 Index has been on the rise since about mid-January 2015.  One way or the other FuelCell may have regained its ‘mojo’ in terms of its stock valuation.

Trading volumes near 3.7 million shares per day seem impressive, but this is still only 1.5% of the ‘float’  or shares outstanding and not held by insiders.   Besides relatively shallow trading volume, FuelCell has been stalked by traders with a bearish view.  The number of shares sold short is around 14% of the float.  Based on volumes at each price level, I estimate a significant portion of the short interest was established at the $2.50 price level.   If I am right in this assessment, shareholders of FCEL cannot expect a ‘short squeeze’ without further price recovery.

I do not expect to see results for the first fiscal quarter ending January 2015 until well into March.  The consensus estimate is for a loss of two pennies on $48.0 million in total sales.  If achieved these results would represent 8% top-line growth and a reduction in the bottom line loss by half.  The company has been building sales and trimming its operating losses over the past six months or so.  Any upside surprise in financial results could reinforce the new found interest in FCEL. 

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

The post FuelCell Energy Rising appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

Near the close of 2014, Nuvera Fuel Cells was acquired by NACCO, an operating company of Hyster-Yale Materials Handling, Inc. (HY:  NYSE).  Nuvera sells a proprietary fuel cell stack under the brand name Orion for industrial mobility, automotive and aerospace applications.  The company also sells its PowerTap Hydrogen Station for on-site hydrogen generation (see image below).  The purchase price was not disclosed and Hyster-Yale has not provided guidance on how the deal will impact its sales and earnings in 2015. 

Apparently, Nuvera’s sales and earnings are not material to Hyster-Yale in the greater scheme of things.  Hyster-Yale reported $2.8 billion in total sales in the twelve months ending September 2014, providing $109.1 million in net income or $6.59 per share.  The company’s operations generated $105.3 million in cash during the same period.

As an investment opportunity Hyster-Yale has a mixed profile.  The stock currently trades at 0.41 times sales and 10.5 times trailing earnings.  Those multiples look very interesting given that Hyster-Yale has achieved a 24.6% return on equity.   A forward dividend yield of 1.6% puts icing on the cake.  However, one of the few sell-side firms that follow HY recently downgraded the stock from speculative buy to neutral.

A closer look at a few technical indicators should give investors some help.  Money has been flowing out of HY for several months and the stock is beginning to look oversold according to both the relative strength index and commodity channel index.  Hence the depressed stock price and nominal price multiples to sales and earnings. Contrarian investors might find those circumstances perfect for an entrance to a bull case scenario in the stock.  The stock has a beta of 0.80, suggesting it would be among the least volatile stocks in a contrarian’s portfolio during the wait for the stock to pass through the current down cycle.

While fascinating for contrarian investors, those who want to take a position in the fuel cell industry may find HY less than appealing.  Hyster-Yale has invested in another quiver for its portfolio of products aimed industrial customers.  The company is one of the main suppliers of lift trucks in the U.S. and has a sizable market share worldwide.  Adding the hydrogen fuel cell products to its line helps keep Hyster-Yale at the leading edge of technologies in materials handling.  Although investors might never see the details, we would expect the new parent to jump start sales of Nuvera’s fuel cells stacks and power station by loading the new products into its worldwide sales network.

Hyster-Yale does not have the glamour of Alibaba (BABA:  Nasdaq), the supply chain company from China that made a big splash on the U.S. equity market in 2014.  However, the need for efficiency in materials handling for all the suppliers and manufacturers that participate in Alibaba’s network makes Hyster-Yale’s lift trucks an important link in the supply chain.  Thus, Hyster-Yale provides an interesting vehicle to invest in the transformation of the world supply chain to alternative energy technologies.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. Nuvera Fuel Cells is included in the Fuel Cell Group of Crystal Equity Research’s Mothers of Invention Index of innovative alternative energy developers.

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