FuelCell Energy (FCEL) Stock: More Gains Ahead?

FuelCell Energy FCEL Stock News

FuelCell Energy Inc (NASDAQ: FCEL) has been on a wild ride. After news broke that the company developed new extended life stacks and made them available to the market, a short squeeze ensued, leading to several sessions of gains. However, profit taking has started to take its grip on the stock after financial results missed their mark, and many are wondering if it is still a good one to own. Here’s how I see it:

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Why Investors Are Concerned About FCEL Stock

A couple of trading sessions ago, FuelCell Energy announced its financial results for the most recent quarter. Unfortunately, revenue took a big hit as expected with the company pulling out of the sales business.

With revenue taking a hit, investors were concerned, many of whom sold their shares. Ultimately, the news led to profit taking that set the stage for some pretty disappointing action in the stock.

This Is An Opportunity

In my view, the recent declines in FCEL stock represtent an opportunity that’s hard to pass up. While revenue declines were a big hit, we expected revenue to fall. After all, when pulling out of the sales industry and shifting focus, we can expect to see revenue take a hit.

Nonetheless, the company’s work to restructure is likely going to pay off in a big way. Instead of focusing on the sales of fuel cell units, the company is focusing on the development of utility-scale power generation.

This means that the company is working with utility companies to build large scale power generation facilities. From there, the company either earns revenue through the maintenance of these facilities or the sale of power generated within them, or both.

In my view, it’s this shift in focus that is going to send FCEL through the roof, especially considering the competitive advantage brought on by the new extended life stacks. Keep in mind, the new fuel cell stacks last 7 years as opposed to the previous model which was rated to last for 5 years. Moreover, over the life of the new stacks, 40% more power is generated than can be expected over the life of the 5-year stacks.

This is a huge competitive advantage. The extended life of the new stacks produced by FuelCell will greatly reduce maintenance costs associated with running a utility scale power generation facility. Moreover, the increased production capacity of the new stacks will ultimately decrease the overall cost of power generation, creating a larger opportunity for utility companies looking to get involved in the space.

At the same time, there’s a global push for clean energy, and that’s what fuel cell technology is all about, clean, sustainable, environmentally ethical energy!

With growing demand for what FCEL provides, a competitive advantage in the utility-scale fuel cell space, and a strong push into that direction by the restructuring of the company, this stock is one to pay attention to ahead.

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