| NEW YORK, June 20
NEW YORK, June 20 Wall Street has been quiet
lately, with volume often below average and gains mostly slight,
but fuel-cell makers have emerged as one of 2014's most dynamic
sectors, making huge swings on massive volume.
This week has been typical. The fuel-cell group's most
prominent players have posted gains that vastly outpaced the
broader market on some of the highest volume among equities.
Ballard Power Systems Inc gave the sector a
catalyst on Thursday, when the Canadian company announced an
agreement with Azure Hydrogen to provide telecom backup power
systems for the Chinese market. More than 13.8 million of its
U.S.-listed shares exchanged hands as a result, swinging from a
gain of nearly 9 percent to end down more than 3 percent. The
stock popped 5.2 percent on Friday, again on heavy volume.
That kind of action is nothing new for the group. Plug Power
Inc has attracted volume of about 4.3 billion shares so
far in 2014, compared with roughly 1 billion throughout 2013.
"This is purely a momentum play, with a herd of short-term
players rotating in because everything else in the market looks
expensive," said Dennis Dick, a Las Vegas-based proprietary
trader at Bright Trading LLC, who closed a position in Plug on
Thursday. "I don't like them long-term, but investors combing
the ditches for value could kick-start further gains."
While the group is small - none of the prominent players,
which includes FuelCell Energy, have a market cap over
$1 billion - interest in the sector has surged since early 2013,
when Plug Power announced an initial public offering.
"It went from running out of money and doing little business
to having a strong balance sheet and enough cash to invest and
expand," said Rob Stone, an analyst who covers the sector at
Cowen & Co in Boston and has a $6 price target on Plug. The
situation is "as different as night and day" now.
Plug, which trades at $4.78, is one of Cowen's clients, and
the brokerage has received compensation from the company.
The price of Plug's stock has jumped more than 900 percent
since the start of 2013, though that follows a five-year streak
of steep annual declines.
Ballard's stock price has nearly tripled this year, while
Fuel Cell shares are up 75 percent.
The move hasn't been missed by short sellers. In March,
prominent short-selling firm Citron Research wrote that Plug's
fair value was 50 cents a share, causing a one-day plunge of 41
percent in the stock.
At the end of May, short interest represented 21 percent of
Plug's outstanding shares, according to Nasdaq, up from 6.8
percent at the end of 2013. FuelCell and Ballard also drew
increased short interest, though of a smaller magnitude.
"The short thesis on these is that in the past, they've had
optimistic outlooks that weren't achieved, and they expect that
to happen again," Stone said. "However, it looks like the issues
in the past have been cured."
In its June quarter, Ballard is expected to post
double-digit growth in its top and bottom lines, while Plug
Power is projected to nearly double its revenue, according to
Thomson Reuters data.
(Editing by Jan Paschal)