In 2006, I wrote a few blog entries about Ballard Power Systems Inc. (USA) (NASDAQ: BLDP), the leading manufacturer of zero-emission proton exchange membrane fuel cells. Basically, Ballard makes fuel cells that use hydrogen to power cars and machines without polluting our atmosphere. At the time of my first blog entry in April 2006, the stock was nearing $8, and in August 2006, it was at $5.88. Now Ballard has sunk even lower, and currently trades in the $5.68 range. But if you could stomach the risk of Ballard back then -- and it is an above-risk pick for sure -- don't give up on it yet.
As I mentioned in my April blog, this is a stock to buy and hang onto for many years. It makes one of the best fuel cells out there, and more and more people are growing conscious of the need to reduce carbon emissions, which means looking to new means of powering vehicles. However, it takes years before the mainstream public adopts new technologies, and fuel-cell powered vehicles are not going to be the norm for decades.
Ballard has cash on hand, but it is burning through it and will rely on continuing grant support from the government and places like DaimlerChrysler AG (NYSE: DCX) and Ford Motor Company (NYSE: F), together who have 30% ownership in Ballard and who have provided millions in funding its technology development. But in the upcoming years, we'll likely see more and more fuel-cell powered buses, for instance, which Ballard has been contracted in the past to provide as demonstration fleets in Europe, Asia and the U.S., among other places.
Ballard just received contract extensions from DaimlerChrysler to provide field services to its fleet of Mercedes-Benz fuel cell buses in Amsterdam and Hamburg. Ballard also has a sales agreement with General Hydrogen to provide 2900 fuel-cell powered forklift trucks, among other contracts.
Bottom line, Ballard has good, environmentally-friendly technology, and it is at the top of the fuel-cell power game. As time goes on, we'll likely see more regulation about emissions, and more companies turning to what works to reduce emissions. We'll also likely see more governmental grants being poured into this technology, and Ballard has benefited in the past from grants. No question, this is NOT a slam dunk, but this stock has reached past the $100 range before, and at $5.68, this might be worth the gamble that it can return to those levels several years down the road.
Type of stock: A high risk, small-cap growth stock in the alternative energy sector, Ballard is a leading maker of fuel cell technologies.
Price target: Trading at $5.55, Ballard is nearing its 52-week low. But if you picked it up earlier, and can stomach hanging on for the ride, I still believe that this is one with the potential to re-power near to its earlier former price of $113. The risk? Other technologies come along that eclipse the fuel cell in efficacy. The possible payoff? People convert to fuel-cell tech in the next decade and Ballard is a strong winner.
Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.
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Reader Comments (Page 1 of 1)
4-15-2007 @ 7:30PM
John Feltman said...
Hilary ,as usual, is right on about BLDP's potential with its PEM cell technology. But the automobile industry is not the only thing that is important to remember about a company that has spent most of its money on prototype applications. I believe the biggest application for this technology is in modular power generation for homes. Bldp already has the capability to mass produce such units from KW to MW.
Long distant,high-wire transmission lines are not a practical way to transmit electric power,given its inefficency and vulnerability to hurricanes etc.
And the fact that over 50% of U.S.Utility power is still generated from fossil fuels,makes PEM cell technology even more attractive. What will make PEM cell technology even more practical and cost effective, in the near future, is advancements in cathode materials. Expensive platinum will be replaced by much cheaper materials. PEM cell technology can also be easily integrated into a solar-panel construction model that I believe is part of the future of home-power generation. And all of this is going to happen much faster than most people believe because the high cost of gasoline and the uncertainty of the availabilty of crude can not be tolerated for much longer without very serious consequences to our economy. WE don't have 10 years to wait for new and cleaner power technology. The Manhattan project took only 24 months to produce the A-Bomb. And I believe the same urgency exists now. The conversion to new enviornmentally friendly power sources is an absolute must. And we can not afford ten or twenty years to achieve that objective.