59-MW-fuel-cell-park, © FuelCell Energy

FuelCell Energy specializes in large-scale projects using fuel-cell technology to generate clean energy (electricity and heat). It is also leading in technologies such as CO2 capture and storage. The company recently secured a contract award by the American Department of Energy for a scalable CO2 capturing project (e.g., for coal-fired power plants) potentially worth around US$ 24 million. The system used in the project is a DFC3000, which is based on a fuel cell. Such prototype efforts show the great future potential of fuel-cell technology.

To sum it up: With around US$ 0.90, the stock quote was below the US$ 1.00 threshold required to keep FuelCell Energy listed on the Nasdaq. Shares that are traded below US$ 1.00 for some time can result in a company’s delisting, meaning the transfer to another exchange. In my opinion, short sellers (around 43 million shares were sold short) have, of course, a high interest in such a development, because a further decline in the share price would make a transfer a likely scenario. But: FuelCell Energy continues to hold high cash reserves of over US$ 80 million, has a line of credit worth US$ 40 million guaranteed by a major shareholder (NRG), has outstanding orders valued at above US$ 300 million, and is the uncontested market leader in its segment. One has to know, however, that large projects such as the one in South Korea are subject to great quarterly fluctuations (because of billing, etc.), so that finished projects involve great capital costs before being settled or sold. I believe that the share price dilemma will be solved in one way or another to keep FuelCell Energy listed on the Nasdaq. This means that either the share price will rise above US$ 1.00 or there will be a reverse stock split (to reduce the number of shares). The company is seen as having great potential because it operates globally in large growth markets, has a very good reputation (regarding ongoing and completed projects) and is committed to being a technology leader (see website).

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This post was written in September 2015 by Sven Jösting.

Note on risk
When investing in shares, every investor must make their own risk assessment, and ensure an appropriate spreading of the risk. The FC companies and/or shares stated here come from the area of small and mid-caps, which means that they do not constitute standard values and their volatility is far higher. This report does not provide purchasing recommendations – and no guarantees are made. All of the details are based on publicly accessible sources, and in terms of the forecasts they only represent the personal opinion of the author.