In a week that was relatively quiet for most markets outside the Boeing (BA) era, Plug Power (PLUG) is one of the top gainers and is currently over 30% for the week. This 30% rally is due to a 50% rally in the last four weeks, and the stock seems to hold its own in the near term. While the company's revenue continued to rise 12% in the last quarter, the stock has now grown more than 100% this year. It's quite possible that this rally will lead to a short-term, higher-level blow-out top, but odds are that the rally here is likely to lose momentum to $ 2.55. In my opinion, the wisest decision here is to bring gains into this strength of the majority of the position and then drive out the rest of the trade without risk. In practice this means that if I hold the stock, I would sell 3/4 of my position above the $ 2.40 mark here.
Plug Power (PLUG) is a designer of fuel cell systems, and the company has continued to grow strongly in recent quarters, with 2018 being a significant year for the company. The Company grossed $ 184.8 million in fiscal 2018, an increase of 42% compared to fiscal 2017. Plug Power has quadrupled quarterly sales over the past two years (from $ 13.7 million in the first quarter of 2017 to $ 59.8 million in the fourth quarter of 2018) and this growth is accelerating in the last two years quarters. Last year, the company produced the first ProGen metal plate stacks. According to the company, these metal stacks are 2.5 times more dense than their previous technology and offer a cost savings of 25%.
The company's GenDrive fuel cells continue to be used by large corporations. Some companies currently using GenDrive products are Home Depot (HD), BMW (OTCPK: BMWYY) and Coca Cola (KO). Some of the benefits of Gendrive fuel cell products include increased productivity, lower operating costs, and zero emissions. Plug Power's management also discussed the potential for four key business announcements in the 2019 fiscal year. While the details of these announcements were minimized, the CEO said they had been working on these deals for over a year.
A look at Plug Power's annual earnings per share shows that the company tends toward lower losses every year. If this trend continued, we would expect a nearly positive profit for the 2021 business year. The Company expects its smallest loss as a public company to be as low as $ 0.11 in the 2020 fiscal year, based on current analyst estimates. Ideally, before I invest in a company, I want to see the annual earnings per share positive, which is why I currently shun the name.
It can be harder to judge a company without positive earnings based on its income development. So in this case, it is valuable to see if we can gain insights from the sales that hopefully have a more meaningful direction. With regard to sales growth, we certainly see a certain sequence on an annual basis and in comparison to the previous year. Revenues for the last quarter increased 92% sequentially and 12% sequentially. This was due to a 47% increase in the previous quarter, making the recent increase in sales even more impressive. Quarterly revenues have risen almost 70% since the first quarter of 2018. So far, the company is well on track to exceed its guidance of $ 155 million to $ 180 million for the 2018 fiscal year, with $ 149 million in revenue already in the first three quarters: YCharts.com, Author & # 39; s Chart)
The chart below, which I have built in revenue, also gives us an overview of the current trend. While fiscal year 2017 was a slight departure from the upward trend, the fiscal year 2018 reached a new high for Plug Power's revenue. In the past two quarters alone, the company has generated $ 113 million in revenue, more than the full year 2017 revenue.
Based on the company's revenue over the past two quarters and the potential (discussed in the conference call) for major announcements in the country This year is undoubtedly a positive factor for the company. The other positive effect is that the company has the potential to finally achieve a positive annual result for the fiscal year 2021, if the company can achieve its goals. While this may seem like a way out for the future, the market usually looks at least 12 months or more ahead, closer than we think.
So why take profits in a company that increases returns and has the opportunity for four big announcements this year? In my opinion, the stock is developing at short notice and is already taking into account some of these positive developments. At a price of $ 1.40 or less, none of this news was priced in just a month ago, at a price of $ 2.40 and up, I think a lot of that news is branded into the stock. This does not mean that the stock can not go higher in the long run and is an absolute sell, but the odds are that the stock is likely to decline in the coming weeks, even if it goes higher later this year.  A weekly chart of the stock below shows that since the second quarter of 2017 it has been furthest outside the Bollinger Bands. This rally led to a 30% drop in the share over the next few weeks. A 15-20% retreat from these stocks would not be surprising. While there is no guarantee that this will be the case, this happens in most cases.
If we move to a trend-following perspective of the stock, we can see that it is a stock, a positive sign, above both the 50-day moving average and the 200-moving average Days after this increase. The stock is likely to see a golden cross in the coming weeks (50-day moving average through the 200-day moving average) if the stock can hold above $ 2.00, which also has a positive impact Share. If we can get a golden cross, I would expect this area to be a new level of support if this rally is for real ($ 1.85). If this is not possible, it would be a significant change in character over the stubborn purchases of recent weeks.
If we look again at the stock, we find that it gets into a resistance of over 2 years. The $ 2.50 level has been a challenging area for the stock over the past two years, and I would expect there will be at least 15 to 20% retracement after reaching these levels in a short amount of time.
While Plug Power, in the face of accelerating revenue growth, remains a compelling (though speculative) opportunity in the long run, the stock is too far ahead in the short term In earlier cases where this over-buy was made, it seems very likely that a sharp retreat of 15 to 20% is expected against the price of $ 2.50. If I were to trade the stock, I would sell 3/4 of my position above $ 2.40 and keep the rest of my position broader to try to drive it for a larger train. There is clearly potential for some positive developments to be launched later this year, but after a 100% step in just six weeks, I believe most of it is priced in.
As long as the cops can defend the $ 1.85 On weekly closure, I would consider any pullback as a noise and likely to be bought up. A weekly close below $ 1.85 would be a change in character, indicating that this rally has been a one-time recovery over the last two years, like the previous ones. For that reason I would use a defensive stop at $ 1.85 for the rest of my position after selling at least 3/4 in strength over $ 2.40.
Disclosure: I / we have no positions in the above stocks. and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinion. I can not get any compensation for it (except from Seeking Alpha). I have no business relationship with a company whose inventory is mentioned in this article.