Plug Power Inc (NASDAQ:PLUG) Looks Set For A Turn Around

Just four months ago, Plug Power Inc (NASDAQ:PLUG) was showing signs of hitting the break-even price. This was a period when the stock was still edgy with volatility indexes fluctuating from critical to ordinary.

However, the tail end of July marked the beginning of a downtrend that is still solid today. Interestingly, even as the company’s books showed positive stories, the stock stopped responding.

According to reports, about 80% of the technology sector of Wall Street experienced a correction beginning late July.

Interest rate jitters

Interestingly, the tech sector dropped around 4.8% in a single day. This makes the largest one-day decline since the aftermath of the 07/08 financial crisis in 2011.

Furthermore, the Fed was to release its quarterly resolution on the state of interest rates by the Monetary Policy Committee. Particularly, investors had worries that the MPC would raise the interest rates.

As such, the Dow Jones shed 800 points in the same period, quite a huge value.

However, the fundamental indicators for the company’s stock also indicate a not so good situation at the time.

In particular, the relative strength index (RSI) for PLUG stock in late July was close to 70. Basically, this means that the stock was in very high momentum. Further, this indicated an overbought situation. Usually, such situations give way to periods of depressed growth and low price.

Share price performance

Currently, the RSI stands at 21.60. This implies that the stock lacks substantial price action.

Interestingly, the RSI values are useful further in determining another important measure of the stock.

Usually, RSI values over 70 indicate an overbought situation for the stock. On the other hand, values below 30 indicate an oversold situation for the shares. In this case, the shares are in an oversold situation. As such, this is a buy signal since the price is highly likely to take an upwards trajectory.

In addition, the 50-day and the 200-day moving averages establish resistances for the stock. Particularly, the stocks MA (50) stands at $1.81 which is a few cents lower than the MA (200) value of $1.91.

 The significance of the indicators is that there is too much supply of the shares. Further, the demand for the shares is very low as investors are unsure of the next direction for the stock.

In terms of volatility, the stock is very stable. Particularly, the average true range (ATR) that measures volatility is quite small, 0.079. Interestingly, this could be an indication of the stability that a share achieves before take-off.



Growth expectations

Speaking of take-off, the latest earnings release for PLUG paint a positive image for the company’s future performance.

In Q3 2018, PLUG saw its revenues soar to $53.2 million against a consensus estimate of $48.56 million. As such, the stock responding by adding 1.55% more to its value.

Further, the quarter experienced reduced net loss with the loss per share dropping to $0.07 from $0.18 Q3 2017. Also, the reduced loss meant increased profit where the quarter registered $4.4 million in gross profits.

Plug Power also sold more units of its proprietary fuel cell units than in any other quarter. As such, the company revised upwards its guidance for Q4 2018 where it targets from $175-190 million in revenues.

There a number of positives for the firm that make its outlook favourable. Plug Power launched an additional manufacturing facility that will operate out of Clifton Park.

Subsequently, this will increase the company’s production capacity. In particular, the firm said it now has a 20,000 annual fuel cell capacity. As a result, it will be able to handle all the demand for its products.

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