Some energy stocks had a phenomenal 2020, led by renewable energy stocks that have high growth potential. But not all growth stocks are created equal.
Some of the hottest energy stocks happen to have uncertain financial futures with losses mounting and little hope for positive cash flow in the near future. That’s why three of our contributors think FuelCell Energy (NASDAQ:FCEL), ElectraMeccanica Vehicles (NASDAQ:SOLO), and Blink Charging (NASDAQ:BLNK) are stocks to stay away from right now.
A bad bet on energy
Travis Hoium (FuelCell Energy): There’s growing bullishness in the market on the future of hydrogen as an energy and fuel source. And that has powered fuel cell stocks higher, particularly a company conveniently named FuelCell Energy. But this isn’t where I would want my energy money today.
Even in a growing industry, companies have to prove they have the right products and strategy. Revenue should be growing, margins should be going up, and there should be at the very least the potential for a profit eventually. FuelCell Energy doesn’t show any of that promise and has actually seen revenue decline and losses increase over the last five years.
To fill the gap, management is constantly selling shares just to fund operations. In just the last four months, management has raised $254.6 million from equity offerings, further diluting shareholders. And there’s no end to the losses in sight.
The chart below may be the most telling to me. FuelCell Energy has consistently been barely break-even on a gross margin basis. And the trend isn’t getting better.
There’s simply nothing to like about FuelCell Energy’s operations, and if you’re looking to get into hydrogen fuel there are better stocks out there.
Don’t just fear missing out
Howard Smith (ElectraMeccanica Vehicles): Recently, it seems that any company with “electric vehicle” in its product description automatically gets investor interest. There are some good reasons for this, as the electrification of transportation looks like it’s here to stay, with a huge runway for growth.
Investors should continue to look under the hood, though, before buying. ElectraMeccanica sells a single-seat, three-wheeled electric vehicle (EV) called the Solo with a 100-mile maximum range and 80 mph top speed. The company also will begin offering a two-seat electric sports car. But third-quarter revenue of about $230,000 makes the company’s $605 million market capitalization hard to justify.
ElectraMeccanica markets its three-wheeled EV as urban commuter transportation for single drivers. While it’s…
Go to the news source: Stay Away From These 3 Renewable Energy Stocks Right Now