FuelCell Energy (FCEL) share price defining bullish 'flag' consolidation

FuelCell Energy (NASDAQ: FCEL) develops and markets Ultra-Clean stationary fuel cell power plants that generate electricity with up to twice the efficiency of conventional fossil fuel plants and with virtually no air pollution. The firm's fuel cells are generating power at over 60 installations worldwide, using such fuels as wastewater gas and biogas from food processing. The company receives funding from the U.S. Department of Energy and other government agencies for the development of such leading edge technologies as hybrid fuel cell/turbine generators and solid oxide fuel cells.

The firm pleased investors last week, when it reported a Q4 loss of 25 cents per share and revenues of $16.5 million. Street analysts had been looking for a 27 cent per share deficit and $13.1 million. The company also announced a 4.8 MW order from Posco (NYSE: PKX), its South Korean alliance partner. Lazard Capital subsequently reiterated its "buy" rating on the shares and boosted its price target from $11 to $15, noting that FuelCell's backlog of $57.8 million was more than double the $27.9 million year ago figure and was up 17% from the $49.6 million reported in 3Q07.

The stock popped on the news and then passed into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with five "strong buys", one "buy", two "holds" and one "sell". Analysts see a 40% growth rate, through the next year. The issue's Sales Growth rate (80.39%) and EPS Growth rate (-0.47 to -0.27 y/y) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 67% of the outstanding shares. Over the past 52 weeks, the stock has traded between $5.84 and $12.57. A stop-loss of $9.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.