One of the most important inputs in the jigsaw puzzle of top-down financial analysis so far this year has been interest rates at the long end of the US yield curve. As rates go higher (generally on inflation expectations), money tends to rotate out of so-called “Growth Stocks” into so-called “Value Stocks”. And vice versa.
This is because the future cost of money is a factor in quant models. And companies that trade on high multiples based on 2025 revenue estimates take a hit when the cost of future money rises. Such a shift places greater value on stocks that have big cash flows now, even if they may not grow significantly in the future – the value side of the market.
A simple heuristic is to look at which index is doing better on a given day – the Nasdaq or the Dow. Generally speaking, if rates are rising, the Dow is likely to be outperforming the Nasdaq. And vice versa.
Yesterday stands out as a major shift in long-end rates, with rates dropping sharply. That could signal a return to dominance for growth stocks – it’s been about 2-3 months of value stocks outperforming. In that time, stocks in spaces like AI, EV, cloud computing, genomics, edge computing, robotics, and space commercialization have been suffering because all of those themes are driven by cash flows that exist in the future 5-10 years out.
With the inflection in rates, it may be time to look for basing opportunities in the beaten down growth stock space. Chief among them are the EV stocks. And the biggest gains may be lined up in the battery plays.
With that in mind, we take a look at a few of the most interesting EV battery tech names, including: FuelCell Energy Inc (NASDAQ:FCEL), BYD Company ADR (OTCMKTS:BYDDY), KULR Technology Group Inc (OTCMKTS:KULR), and Plug Power Inc (NASDAQ:PLUG).
FuelCell Energy Inc (NASDAQ:FCEL) is a staple in the EV supplier space. The company designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed power generation.
The company offers SureSource product line based on carbonate fuel cell technology in various configurations, including on-site power, utility grid support, distributed hydrogen, and micro-grid, as well as multi-megawatt applications; and SureSource Recovery power plants for natural gas pipeline applications.
FuelCell Energy Inc (NASDAQ:FCEL) most recently announced progress toward achieving commercial deployment of its solid oxide fuel cell (SOFC) technology. The technical progress in ongoing programs is further advanced with additional funding provided by the U.S. Department of Energy (DOE). The Company is pleased to report that based on its progress and differentiated platform it has been awarded Phase 2 funding in the amount of $8 million for the previously announced ARPA-E project for development of ultra-high efficiency SOFC systems for power generation.
“We continue to make progress in advancing our solid oxide fuel cell platform toward commercialization with the aid of key DOE programs in addition to our own capital investment,” commented Jason Few, President and Chief Executive Officer of FuelCell Energy. “With the addition of solid oxide technology, FuelCell Energy offers one of the most complete portfolios of stationary fuel cell platforms in the industry. FuelCell Energy is committed to providing distributed power platforms that help modernize the electric grid, provide a path to decarbonization, deliver energy resiliency and offer a solution to more seamlessly integrate intermittent sources of renewable power like wind and solar.”
Even in light of this news, FCEL hasn’t really done much of anything over the past week, with shares logging no net movement over that period.
FuelCell Energy Inc (NASDAQ:FCEL) managed to rope in revenues totaling $14.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -8.5%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($190.8M against $53.1M).
BYD Company ADR (OTCMKTS:BYDDY) is a company backed by Warren Buffet and linked to KULR (below) by dint of its co-founder being an advisor on the KULR board. The company trumpets itself as “the largest supplier of rechargeable batteries on the planet and has the largest market share for Nickel-cadmium batteries, handset Li-ion batteries, cell-phone chargers, and keypads worldwide.”
BYD also has the second largest market share for cell-phone shells in the world.
BYD Company ADR (OTCMKTS:BYDDY) recently announced that buyers of its line of American-made battery-electric transit buses, motor coaches, and heavy-duty trucks are eligible for $165 million in funds through the California Air Resources Board (CARB) Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP).
According to the release, HVIP will open to new voucher requests at 10 a.m. on Tuesday, June 8. A total of approximately $165 million will be available; however, only half of the funds will be released to the public when the program opens. The other half will be made available two months later, at 10 a.m. on August 10.
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 11% in that timeframe.
BYD Company ADR (OTCMKTS:BYDDY) managed to rope in revenues totaling $109.2B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 37.3%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($17.1B against $126.2B, respectively).
KULR Technology Group Inc (OTCMKTS:KULR) develops, manufactures and licenses next-generation carbon fiber thermal management technologies for batteries and electronic systems. The company offers lithium-ion battery thermal runaway shields; fiber thermal interface materials; phase change material heatsinks; HYDRA TRS battery storage bags; internal short circuit device; and CRUX cathodes. Its technologies are used in electric vehicles and autonomous driving systems, artificial intelligence and cloud computing, and energy storage and 5G communication technologies. It developed some of its technology solutions as part of its partnership with NASA.
KULR most recently announced it will serve as a sponsor of Marco Andretti in the 105th Running of the Indianapolis 500 this Sunday, May 30, 2021. Piloted by Marco Andretti, the No. 98 Honda represents a partnership between Andretti Herta-Haupert Autosport with Marco Andretti and Curb-Agajanian. As a corporate sponsor, the KULR logo will be featured on the side tire ramp of the race car.
KULR Technology Group Inc (OTCMKTS:KULR) develops, manufactures and licenses next-generation carbon fiber thermal management technologies for batteries and electronic systems. Earlier this year KULR became the official thermal management and battery safety technical partner for Andretti Technologies, the advanced technology arm of racing enterprise Andretti Autosport. The alliance establishes a thermal management testing and design platform for high-performance battery solutions with the highest safety ratings adapted to the technical requirements of Andretti’s racing enterprise.
“Excited to have KULR expand to our INDYCAR family for this year’s Indy 500,” said Marissa Andretti, Vice President, Andretti Autosport. “We already collaborate together on other motorsports projects, and we are both huge proponents of highlighting technical excellence, racing safety, and team building. I’m excited to see what we can accomplish together – both on and off the track.”
“The Andretti name represents the pinnacle of racing achievement in the NTT INDYCAR SERIES,” said Michael Mo, CEO, KULR Technology Group. “KULR is honored to be associated with the heritage and legacy Andretti Autosport maintains in the world of high-performance racing.”
In April 2021, KULR became official thermal management and battery safety provider for Andretti United Extreme E, the combination of U.S.-based Andretti Autosport and England’s United Autosports, for Extreme E, the new all-electric off-road global racing series.
KULR Technology Group Inc (OTCMKTS:KULR) managed to rope in revenues totaling $208K in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 297.8%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($8.9M against $2.9M).
Plug Power Inc (NASDAQ:PLUG) provides hydrogen fuel cell turnkey solutions for the electric mobility and stationary power markets in North America and Europe. It focuses on proton exchange membrane (PEM) fuel cell and fuel processing technologies, fuel cell/battery hybrid technologies, and related hydrogen storage and dispensing infrastructure.
The company offers GenDrive, a hydrogen fueled PEM fuel cell system that provides power to material handling electric vehicles; GenFuel, a hydrogen fueling delivery, generation, storage, and dispensing system; GenCare, an ongoing maintenance and service program for GenDrive and GenSure fuel cells, GenFuel products, and ProGen engines; and GenSure, a stationary fuel cell solution that provides modular PEM fuel cell power to support the backup and grid-support power requirements of the telecommunications, transportation, and utility sectors.
Plug Power Inc (NASDAQ:PLUG) just announced that Benjamin Haycraft as the Company’s newest Vice President of Strategy and Business Development, Europe. This appointment confirms Plug Power’s desire to accelerate its development opportunities in Europe.
Before joining Plug Power, Benjamin Haycraft advised the Company as a Santander banker, resulting in the announcement of the joint-venture projects at the start of 2021 with European leaders including the Renault Group in France and Acciona in the Iberian Peninsula. Located in France, Benjamin Haycraft will be responsible for executing the European Plug Power strategy, sourcing external growth opportunities, acting as commercial interface between Plug Power and its partners, and deploying green hydrogen generation and distribution infrastructure on a large scale across Europe.
If you’re long this stock, then you’re liking how the stock has responded to the announcement. PLUG shares have been moving higher over the past week overall, pushing about 3% to the upside on above average trading volume. PLUG shares have been relatively flat over the past month of action, with very little net movement during that period.
Plug Power Inc (NASDAQ:PLUG) pulled in sales of $-0.3B in its last reported quarterly financials, representing top line growth of -422.1%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($1.3B against $222.4M).
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