FuelCell Energy, Inc. (NASDAQ:FCEL)

CAPS Rating: 1 out of 5

Develops and manufactures fuel cell power plants for clean, efficient and reliable electric power generation. Currently commercializing its core carbonate fuel cell products, offering stationary applications for commercial and industrial customers.

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Player Avatar KevinKPU (94.74) Submitted: 3/17/2009 12:31:34 PM : Outperform Start Price: $2.62 FCEL Score: -160.38

Fuel Cell Energy makes alternative energy distributed power plants. They are on the fine edge between commercialization and bankrupcy, and are burning cash and not generating profit-making orders. But they also tend to cycle with the price of oil/nat. gas. Despite their dificult prospects of moving products in this weak spending environment, I anticipate that their stock price will bounce once oil and nat. gas come off their lows...throw on top of that the democratic government, and some BO bailout $$ supporting green initiatives, and this stock appears to have nowhere to go but up.

Member Avatar salubrius (< 20) Submitted: 3/7/2011 10:07:24 PM
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I have in hand FCEL's most recent financial statement received a few days ago.. It claims that it's breakeven point is no longer production of 500 MW of generating capacity per year as its first CEO claimed when it changed, several years ago, from a research firm to a commercial development and production company..

"We have a compelling business with multiple revenue streams
including power plants, service, and ancillary sources such as
parts and plant installation. We have reduced our product costs
to the point that sales volume in the range of 75 MW to 125 MW
annually drives profitably." 2010 Annual Report (AR) p. 4.

To date, FCEL's annual production rate has not exceeded the rate of 35 MW. For a long time it was 5-12 MW per year. But for the first quarter of 2011, the annualized production rate was 35 MW. AR 3p. 3.

In recognition of its increased orders, FCEL has recently increased production capacity through increased plant investment. Its annual production capacity is now rated at 90 MW per year. AR p. 3

Orders from South Korea alone are expected to rise to 350 MW per year commencing in 2012 and continue at that rate until 2016. Thereafter, from 2017 until 2022 they are expected to increase to 700 MW annually. AR p. 8

"Kidmadeira", who lives in Connecticut, has bet me some pizza and beer at Pepe's in New Haven that FCEL will never show profitability. I think that with FCEL's large current backlog and its anticipated orders from South Korea alone, FCEL may soon show a profit. I prefer Pepe's large pizza, mozzarella all over and with sausage and onions. I will be driving so instead of beer, I will settle for a soft drink.

When FCEL shows it can make a profit, I think we can expect an increase in its share price. With the orders anticipated, it may even commence paying dividends.

FCEL also owns some 42% of VERSA POWER. FCEL makes high temperature fuel cells using molten carbonate of its electrolyte. Because it generates power electrochemically, its toxic pollution emissions of NOX, SO2 and particulate matter are only some 1% of those emissions of a conventional coal fired boiler and steam turbine. VERSA POWER makes high temperature fuel cells using solid oxide as the electrolyte. This is the same type of electrolyte as used by Bloom Energy. Both use planar architecture. Both eliminate the need for a noble metal catalyst such as platinum. As FCEL has a high temperature fuel cell also, it needs no platinum either.

The long run competitiveness for stationary fuel cells depend on 1. Length of Life of the fuel cell stack, 2. Its fuel efficiency during that life, and 3. The cost per kW of manufacture. FCEL and VERSA POWER have been participating in DOE's SECA $1 billion research and development program intended to reduce the cost of fuel cell manufacture. DOE has represented that VERSA POWER's estimated costs of producing its solid oxide fuel cells in large volume, show costs have declined to $700 per kW and are anticipated to be reduced to $300 per kW by next year. The solid oxide can be produced in modules of 10 kW and be used for residential electricity supply and home heating. It can also be manufactured in clusters of a 100 MW or more to be used for central generation from coal syngas. While Bloom Energy has superb public relations, in the three foregoing factors I believe VERSA POWER is ahead.

FCEL has $660 million in tax loss carryforward. When it makes a profit, it will be able to keep all of it for a long time -- maybe even pay dividends.

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