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You may not realize it, but there is already a lot of pain and pessimism woven into it. Plug power (Nasdaq:plugI’ve warned investors about Plug Power stock before, but the stock has been badly downgraded and the balance of risk and reward actually seems to favor buyers.
But this isn’t just an “it can only go up” argument. In fact, there’s some recent news that bodes well for Plug Power. So maybe it’s time to embrace the hate, make friends with the market pessimism, and take a bet on Plug Power.
Plug Power’s Big Deal Is a Big Deal
Plug Power’s stock price has fallen significantly so far this year, over the past 12 months, and over the past three years. But the stock’s decline may be overdone, as Plug Power has landed several potentially lucrative contracts.
In particular, the company has established itself as a go-to supplier of electrolysis systems. For example, Plug Power recently announcedOrder secured We delivered a 25 megawatt proton exchange membrane electrolysis system for a European customer.”
Additionally, the deal could expand electrolyzer capacity by up to 2 gigawatts.
This isn’t the company’s only big contract. Plug Power Recently closed 3GW Basic Engineering and Design Package Contract Allied Green Ammonia Launch of electrolysis equipment project in Australia.
Additionally, Plug Power has “an additional 4.5 GW of BEDP contracts across the United States and Europe,” bringing the company’s total global BEDP contracts to an astounding 7.5 GW.
Plug Power ‘intends to benefit’ from government assistance
It’s hard to predict what the U.S. government will look like in 2025, but for now, it’s clear the government is supportive of hydrogen production, and Plug Power in particular.
Notably, the U.S. Department of Energy’s Office of Loan Programs has awarded Plug Power:Conditional Commitment” for loan guarantees.
This could be worth up to $1.66 billion in loan capital to Plug Power to “finance the development, construction and ownership of up to six green hydrogen production facilities.”
Plug Power may or may not actually receive the $1.66 billion loan. However, Plug Power’s “I intend to recognize The “benefits” of inflation control laws.
Plug Power said the IRA provides “production credits” of up to $3 per kilogram for clean hydrogen produced in the U.S., which it plans to take advantage of at its hydrogen production plant in Georgia.
Incidentally, Plug Power also has a hydrogen plant in Tennessee and another in Louisiana that is scheduled to be operational by the end of the year, so don’t be surprised if Plug Power maintains its rapid expansion pace, especially as it benefits from government support.
Should you buy Plug Power stock? Definitely.
The general market sentiment towards Plug Power is not overwhelmingly positive, and a recovery in the stock price is not guaranteed – the only real “bottom” here is zero, so only those with risk tolerance should consider investing in Plug Power.
Meanwhile, the market has already priced a fair amount of pessimism into Plug Power’s stock, and any recovery could be truly spectacular.
So, given the company’s potentially lucrative deal and government support, I’m cautiously bullish on Plug Power stock, but don’t get too overinvested in Plug Power shares in your portfolio, as a selloff could still be on the cards.
Publication date, David Moardel Did not have, directly or indirectly, any positions in the securities mentioned in this article. Opinions expressed in this article are solely those of the author, copyright InvestorPlace.com. Publication Guidelines.
