The Investor Diary Entry #17: February 27, 2023
Finally, today I cleared my tasks to start my journey into researching Hydrogen fuel cell companies stocks. I have started with FuelCell Energy Stock Analysis.
I first looked into the industry in general and articles that would talk about multiple companies in the industry to get a general view on how analysts are predicting the future performance of the industry.
When I conducted my research on the drone manufacturing companies, I did a similar exercise but not with such detail. Still, my general conclusion is that it is really hard to evaluate companies in new industries.
Value Stocks In New Industries
To be able to deduce whether a stock price is of value, one needs to look into the history of the company and one would need at least five years of financial data to be able to determine the price at which a stock price would be perceived as a value stock.
In new industries this is hard to conduct. Even if the company is an established one, but one that has an infrastructure to get into the new industry, the stock cannot be analyzed based on the new industry, but rather on the previous and current operations of the company.
This led me to the conclusion that my current hasty way of evaluating a company cannot be maintained, and the way I am analyzing a stock is not mature enough yet. Therefore, I decided to give myself more time to analyze a stock and finding ways to look deeper into a company and its industry.
The New Methodology
Today I was lucky to find another source for analyzing a company that gives considerable data and view of the company in question. Accordingly, I added this source to my stock research browser tabs.
Second, I would go into the software that I am using, to have a look at the financial situation of the company and the news related to this company.
Third, using the same software I log in my future assumptions of certain items such as revenue, profit margin, cashflow margin, P/E, P/FCF…etc. to have a general view on what could be a value stock price using those assumptions.
As I said before, making assumptions on new companies is not easy. Actually, it is undoable. One can only guess, but I do it to have a general view and to check how far away the resulted stock price from the current stock price.
Fourth, I read the yearly and quarterly reports of the company. This area gets tricky if the company is not listed in the USA. One of the companies within the Hydrogen fuel cell industry is in Norway. I was not able to get financial information of the company. I was only able to read articles about it.
This might seem a little bit different that the order and the list that I mentioned in the previous diary entry, but that is fine, as I think this will need a while unitl it settles into a fixed order.
The Hydrogen Fuel Cell Industry
Although, I have not delved into the companies of this industry yet, and FuelCell Energy Stock is the first one that I just started analyzing, but the general view is that this industry is a true gamble.
Many expect Hydrogen cell fuel industry to expand in the future, but the prediction is filled with doubt. The “ifs” are crucial and if any of those “ifs” did not materialize then the world would not be able to see this expansion in the usage of the hydrogen fuel.
Furthermore, yes the whole world sees the benefits of such clean energy that the current technology is able to use this fuel without combustion, but the other types of energy are within very strong industries.
My question is not environmental, my question is related to competition. One of the major caveats of investing in hydrogen fuel is the speed of governmental policies that would entice the private sector to invest. Therefore, there is a policy making requirement. Remember this is only one of the obstacles.
If we look at the strength of the competing fuel industries, not only financially but in terms of their current influence on energy policy making, we can see that it could be extremely hard for the birth of a new competing energy.
On the good side, Hydrogen fuel and hydrogen fuel cell technology is currently used in industry, but the world is waiting for it to be used at a wider scale including transportation.
Furthermore, major companies in the current energy market are investing to build their own hydrogen fuel infrastructure.
What the world is also waiting for is to have the technology to produce hydrogen fuel at a much lower cost economically and environmentally.
FuelCell Energy
The news regarding FuelCell Energy is very encouraging. The projects that it is undertaking, the proprietary technology that it owns, the reliability and technical capability of the company are all good news for the company.
The current bad new for the company is its financial health. The company has not been profitable, and is not expected to be profitable for the next three years. This might not be the case only for FuelCell Energy, this could be the case for the majority of the players in the industry.
I am now at the phase of reading the latest 10K report of the company; therefore, I still did not make my mind yet.
Conclusion
I am very glad that I started my journey into looking into the Hydrogen Fuel Cell industry, and that I have started with FuelCell Energy Stock Analysis.
I am also excited that now I am following a new way in researching companies and stocks. I have chosen a more relaxed attitude that would allow me to take my time studying each stock and deciding whether it is good fit for me or not.
FuelCell Energy looks encouraging at the moment. The risk as I see it now lies with how much longer can the company sustain itself without profitability in light of the increasing difficulties to accessing funds.
The Investor
Monday 27 February 2023
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second as a place that I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
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