Plug Power shares have had a tumultuous roller coaster ride. But despite the sharp drop in the share price, the stock still looks very expensive, especially when compared to the following three stocks.
That is why much lower prices are possible with Plug Power
Of course, the gigantic market that the emerging hydrogen economy is opening up is insanely attractive. But not only the management of Plug Power knows that, but also a few hundred other companies.
And what the hydrogen world will look like in 15 or 20 years can hardly be estimated at the moment. It is not clear how the lightweight element is preferably produced, nor how it is stored and distributed. Perhaps instead of electrolysis, fossil production including carbon capture will win the race. Or will direct solar water splitting or even a biological process prevail?
Is it possible to do without high-pressure tanks because the hydrogen is processed into more easily manageable methanol or ammonia? Then you also need other fuel cells than Plug Power currently offers.
And even if the market for plug power develops in a friendly way, the company is faced with a phalanx of equal fuel cell manufacturers. This also includes the recently founded joint ventures Cellcentric (Daimler / AB Volvo) and Bosch Hydrogen Powertrain Systems (with Qingling Motors in China). The situation is similar with electrolysis.
Despite all of these uncertainties, investors are ready to buy Plug shares with a market cap of over $ 17 billion (closing price June 4). The management hopes to write just 10% of this in sales by 2024. And it is unclear whether there will be profits.
What you could get alternatively for Plug Power
$ 17 billion may be better invested. Take the following three companies as an example.
5 Mrd. US-Dollar/4 Mrd. Euro: Plastic Omnium
With sales of 7 billion euros (8.5 billion US dollars), Plastic Omnium is one of the larger automotive suppliers. The traditional French company is known for its plastic parts and front modules. However, in the last few years there has been an increasing push into the area of hydrogen, especially with high-pressure containers.
There is also the EKPO Fuel Cell Technologies joint venture, one of the world’s strongest fuel cell manufacturers. Partner ElringKlinger contributed its technology, which it had refined over the years. It also sold its Austrian subsidiary for integrated hydrogen systems to Plastic Omnium. Market shares are now to be conquered aggressively.
1,3 Mrd. US-Dollar/1 Mrd. Euro: Hyster-Yale Materials Handling
Hyster-Yale posted sales of $ 2.8 billion in 2020, far more than Plug intends to do in 2024. The leading American manufacturer of industrial trucks is also a direct competitor of Plug. After all, the subsidiary Nuvera also has a lot of experience in the development of fuel cells for forklifts and other vehicles.
Nuvera is certainly much smaller, but has big goals. The range of applications and production capacities are to be expanded considerably. In February Nuvera installed automated test systems at the Milan site, which, according to the company, none of the competitors have.
4.2 billion US Dollar / 462 billion Yen / 3.5 billion Euro: Kawasaki Heavy Industries
Despite the hot Kawasaki motorcycles, the heavy industry group is one of the dusty Japanese conglomerates. From turbines and tunnel bores to robots to ships, high-speed trains and helicopters, everything is included that adds up to total sales of almost 14 billion US dollars. But something is happening on the island. Kawasaki Heavy Industries has developed a Vision 2030 to give itself a sharper and more modern profile.
The hydrogen economy is one of the central future topics that management is focusing on. Kawasaki has a lot to contribute to that. On the one hand as an integrator and user in his motorcycles and heavy-weight means of transport. On the other hand, because of its leading liquid hydrogen technology, which includes liquefaction, large storage facilities and special transport ships. It is based on extensive LNG experience and could hold great potential.
Can Plug Power pass it by?
Currently, each of these three companies is not only much bigger than Plug Power, but also usually solidly profitable. Together they have sales in the range of 25 billion US dollars and each have interesting expansion opportunities in the hydrogen sector.
Nevertheless, their total market capitalization is just 10.5 billion US dollars, compared to 17 billion for the risky Plug Power. If you ask me, I’d rather go with the established trio. It probably offers more not only today but also in the distant future.
The article Forget the Plug Power Share! This trio can do a lot more together for little money was first published on The Motley Fool Germany.
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Ralf Anders does not own any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
Motley Fool Deutschland 2021
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