Fuel Cell Stocks: Waiting for Government Handouts to Arrive? BLDP, ENA, FCEL

The fuel cell industry to some degree reminds me of the solar panel industry: An industry that is largely dependent on government subsidies and the whims government policy makers and politicians for its successes of failures. In fact, there is even a bill before Congress now called H.R. 1659 Fuel Cell Industrial Jobs Act of 2011 that will “improve the current tax credit for fuel cell-powered industrial vehicles” (In other words, give away tax payer money to support some politician’s pet project in their Congressional district).

Of course, there is nothing wrong with trying to get money out of the government if politicians wish to just give it away and everyone loves the idea of renewable energy, fuel cells and fuel efficient cars. Nevertheless, investors in fuel cell stocks still must wonder how much room for growth and earnings the fuel cell industry has if it weren’t for subsidies like the proposed H.R. 1659 Fuel Cell Industrial Jobs Act of 2011.

Either way, three fuel cell stocks (BLDP, ENA and FCEL) that investors may want to take a closer look at would include:

• Ballard Power Systems (NASDAQ: BLDP) designs, develops, manufactures and sells fuel cell products in the USA, Canada, Japan, and Germany. BLDP itself operates in three segments (Fuel Cell Products, Contract Automotive and Material Products) and has strategic alliances with automakers Daimler AG (ETR: DAI) and Ford Motor Company (NYSE: F) to develop and commercialize automotive fuel cells. For 1Q2011, Ballard Power Systems had revenues rise $3.4 million or 29% to $15.3 million and a net loss of -$10.2 million compared with -$6.6 million for 1Q2010. Ballard Power Systems also noted that they expect approximately 65% of their 2011 revenue to arrive in the second half of the year. Ballard Power Systems recently closed at $1.65 and has a 52 week trading range of $1.31 to $2.51 a share.
• Enova Systems (AMEX: ENA), formerly known as US Electricar, Inc., develops, designs and manufactures various drive systems and related components as well as power management and power conversion components for the USA, Asian and European markets. ENA’s products are used for hybrid and electric buses, commercial vehicles, locomotives, transit buses, stationary power generation systems, industrial vehicles and trucks. For 1Q2011, Enova Systems saw an increase of 217% to $2.9M in revenue from the same period in 2010 and a 164% increase in gross income. In addition, Enova Systems had its 7^th consecutive quarter with positive gross margins. Enova Systems recently closed at $0.87 and has a 52 week trading range of $0.60 to $1.65 a share.
• FuelCell Energy, Inc. (NASDAQ: FCEL) develops and manufactures fuel cell power plants for the electric power generation industry in the USA, Canada, Germany, Japan and South Korea. FuelCell energy also plans to move into the clean coal industry thanks to an award from the Department of Energy. However, it should be noted that while FuelCell Energy has steadily increased its sales, it has yet to become profitable – like many players in the fuel cell industry. FuelCell Energy recently closed at $1.63 and has a 52 week trading range of $0.98 to $2.72 a share.

However, its also worth noting that General Electric (NYSE: GE) and United Technologies (NYSE: UTX) are getting into fuel cells – meaning that smaller firms like BLDP, ENA and FCEL will soon face strong competition with much deeper pockets. Hence and no matter if H.R. 1659 Fuel Cell Industrial Jobs Act of 2011 or other government handouts passes Congress and get signed into law, it may not be enough to power BLDP, ENA and FCEL for the long term.