Why Enphase, Plug Power, and Bloom Energy Stocks Popped

What happened

Renewable energy stocks are in the green as the trading week winds down Friday.

As of 12:15 p.m. ET, shares of solar power play Enphase Energy (NASDAQ: ENPH) are getting a 2.6% lift from some positive sentiment on Wall Street, where investment bank Citigroup has just lowered the stock's price target by 20% -- but nevertheless valued Enphase shares at $205 apiece. Despite this being technically bad news (because of the price target cut), investors may be taking it as good news -- because if Citi is correct, there could still be 69% upside in Enphase stock.

Meanwhile, fuel cell plays Bloom Energy (NYSE: BE) and Plug Power (NASDAQ: PLUG) are up 2% and 2.7%, respectively, on some good PR from the PRC.

Red map of China with a rising green stock arrow superimposed.

Image source: Getty Images.

So what

PRC. That's the "People's Republic of China," you see. And as Bloomberg advised last night, both Bloom and Plug are due to get some free publicity from China next week when the Winter Olympics begin in Beijing.

The 2022 Winter Olympics will employ "600 fuel cell vehicles" in and around the Chinese capital, in a globally televised demonstration "of China's efforts to decarbonize its transportation sector," reports Bloomberg. And the fuel for these fuel cell vehicles will come from a Chinese "power-to-hydrogen electrolyzer facility" co-owned by Shell, that is "one of the world's largest green hydrogen plants."

Now what

This is good news for fuel cell stocks in two ways. First, and most obviously, getting free advertising at one of the world's most high-profile sporting events is a windfall bit of good luck for the fuel cell industry, which has been plagued by years upon years of financial losses that no amount of revenue growth has seemingly been able to alleviate.

But second, as Bloomberg observes, while China may have one of the world's biggest green hydrogen plants, it turns out that it still doesn't produce enough hydrogen to fuel even just 600 fuel cell vehicles. Fact is, this "joint venture will supply [only] half of the green hydrogen used for electric vehicles that run on fuel cells during Olympic events in the region," Shell said. And this fact may highlight the need for dramatic increases in the amount of hydrogen being produced in order for fuel cell vehicles to have a chance of taking off, encouraging investors to seek out investment opportunities in hydrogen production specifically.

And which fuel cell companies are best known for their investments in green hydrogen production?

Funny you should ask. Their names are Plug Power and Bloom Energy.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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