Sign InPlug Power Inc.: Bearish trend but significant growth potential makes it an attractive long-term Buy
Summary
As of August 7, 2023, Plug Power Inc. (PLUG) saw a decrease in stock price and trading volume, but with an oversold condition indicated by RSI, potential growth based on industry trends and DCF, and high target prices, it is recommended as a Buy for long-term investors, although the stock's volatility and challenging financial figures pose a higher level of risk.
Company Overview
Plug Power Inc. (Ticker: PLUG), a constituent of NASDAQ, develops hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity. The company is well-positioned within the thriving alternative energy sector, with a focus on hydrogen fuel cell technology.
Performance Analysis
Plug Power closed at $11.05 on August 07, 2023, indicating a decrease of -4.41% or $0.51. On the same day, the trading volume was 18.57 million shares, lower than the average volume of 26.2 million. The stock experienced a low of $10.84 and a high of $11.50. The current market capitalization stands at $6.64 billion.
The stock's 50-day moving average ($10.64) is below the 200-day moving average ($12.54), which typically indicates a bearish market trend. The MACD (3-month) of 0.87 also supports this trend. However, the RSI14 at 35 suggests that the stock is nearing an oversold condition, which could imply a potential reversal in the near future.
Despite the substantial fluctuations observed in daily trading, the ATR (average true range) of 6.56 suggests considerable volatility in the stock, suitable for traders favoring volatility.
It's important to note that the stock has a support level at $10.91 and a resistance level at $11.65, which may play a critical role in future price movements.
Financial Analysis
The company's earnings per share (EPS) stand at -$1.27, and the price to earnings ratio (PE) is -8.70. This negative EPS, along with a negative PE, suggests that the company has not made a profit recently, which might be reflected in the stock’s pricing.
The discounted cash flow (DCF) estimation of $12.24, above the current stock price, indicates the stock may be undervalued, implying potential for growth if the company achieves its projected cash flows.
Consensus target prices for PLUG vary greatly. The highest estimate stands at $65, the lowest at $15, and the median at $39, suggesting a significant upside potential. However, it is crucial to take these target prices with caution, as they represent analyst' estimations and not guaranteed outcomes.
Fundamental Analysis
The latest news indicates some cost headwinds and labor shortages that could affect Q2 2023 earnings for Plug Power, which investors need to monitor in the earnings announcement scheduled for August 09, 2023.
Several articles also suggested the alternative energy sector is flourishing, with hydrogen stocks, including PLUG, presenting attractive entry points. This broad industry trend coupled with the positive outlook on the economy could potentially signal substantial growth potential for Plug Power.
Conclusion
Though a current bearish trend is observed technically for PLUG, the oversold condition suggested by RSI, the significant potential for growth indicated by industry trends and DCF, and large upside shown by target prices turn the stock to an attractive option for long-term investors.
Therefore, based on the provided data and considering potential industry and economic growth, the recommendation would be a Buy for Plug Power Inc. Nevertheless, the high volatility and the challenging financial figures imply a higher level of risk, which investors should be aware of and manage according to their risk tolerance.
