Is FCEL Stock a Solid Long Term Investment?

Stock market

These days, there is a lot of buzz about finding more effective, innovative ways to create energy. Enter FuelCell Energy (traded as FCEL), a company that specializes in creating fuel cells from biofuels as well as natural gas. They design, manufacture and operate these fuel cells. There was a time when it seemed like they were poised to take things to the next level, but in the last quarter they’ve also lost a great deal of their previous gains. If you’re wondering whether or not this is a good option for a long-term investment, the recent news about their performance in the stock market probably has you wondering whether or not they should still be on your list.

Recent Performance: A Cause for Concern?

Obviously, the thing that probably serves as the biggest source of concern is the fact that in the last month alone, this company’s stock has declined by a whopping 26%. It doesn’t help that news has widely circulated that this is one of the companies that was depending on a program from President Biden that would have given a number of tax incentives and other forms of financial support to companies exactly like this one. Unfortunately, that program has largely stalled. Furthermore, its future success is not at all certain. In fact, it’s not even certain whether or not the program will continue in any capacity or if it will be scrapped in its entirety. Obviously, this is something that would have a lot of investors concerned. If that was the only thing going on here, it might be worth looking into things a little bit more in order to determine whether or not there might be a chance that this is the only reason for the downward slump in their performance on the stock market. However, that’s not the only thing that’s going on here because the company was experiencing losses before any of this ever happened. If that’s the case, then it’s obviously necessary to go back and take another look at things in order to try and ascertain why.

A Sign of Other Problems?

It’s worth noting that the 26% decline in the stock market over the last quarter represents a loss of approximately $22.5 million. That’s concerning enough in and of itself. However, it becomes even more concerning when you consider the fact that this isn’t the first time that the company has experienced significant losses. In fact, if you go back and look at the numbers for this same time last year, you’ll also notice that the company is down $13.9 million compared to where it was last year. That’s in addition to the $22.5 million dollars that has been lost in the most recent quarter. Obviously, this is something that’s going to be a problem and it’s something that has to be dealt with in one capacity or another. After all, it just isn’t feasible for investors to continue to consider this as a long-term investment without answering questions about why the stock is declining as much as it is. That means that you have to go back and look at things under a microscope in order to better understand why the company isn’t performing up to par. As it turns out, the overwhelming number of stock market analysts believe that the stock is declining because the company grew too quickly and now it’s experiencing the types of growing pains that typically come with rapid growth. There’s also some speculation that a great deal of stock was sold off too rapidly, effectively meaning that it’s almost worthless at this point. Even more alarming, these same stock market analysts also believe that things are going to get a lot worse before they get better.

Additional Concerns

If that’s not enough to make a lot of potential investors pause, consider this fact. The stock has been traded on both the NASDAQ and the S&P 500. While it’s been sliding on the NASDAQ for some time, it had been holding its own on the S&P 500, yet today it is down by 2.94%. Maybe it was inevitable that this was going to happen. After all, it’s been sliding on the NASDAQ for some time. That said, this is one more red flag that is causing a lot of analysts to be concerned. The thought process is that since it’s also back sliding on the S&P 500, things are a lot more dire than many people initially believed them to be. As a matter of fact, there have been rumblings of concern regarding whether or not the company is capable of pulling itself out of this swamp or if it will continue the decline to the point that it becomes almost impossible for things to turn around. That’s a fairly serious question and it’s being posed by a lot of individuals that spend all of their time studying these types of things. If you are an investor and you’re considering stocks that you can use as a long-term investment as a way of making money, it doesn’t make a lot of sense that you would consider investing in something that has so many red flags attached to it. As matter of fact, it seems like it is almost the same thing as opening your window and simply throwing your money right out into the wind.

Numbers Don’t Lie

Right now, you can purchase the stock for $4.87 per share. During the last two days of trading, that same stock could be sold for almost $1 per share more than it can right now. That’s a fairly significant loss when you’re considering that you’re only talking about two days worth of trading. Obviously, anybody who has the stock knows that it’s not moving in the right direction. Obviously, that poses a number of problems for anyone who’s considering purchasing the stock. To be perfectly honest, it’s rather hard to understand why anyone would even remotely consider purchasing it as a long-term investment when they see the current trend. If you’re not fully convinced, consider the fact that most stock market analysts believe that within the next three months, the stock is going to plummet by an additional 47%. That’s almost unheard of. By the time it’s all said and done, the stock won’t be worth hardly anything. Of course, there’s always a chance that it might rebound at some point in the relatively distant future, but is that something that you really want to take a chance on?

Getting Down to Basics

When you’re thinking about purchasing a stock as a long-term investment, there are a number of factors that have to be considered. There are times when it’s exceedingly difficult to figure out whether or not you should purchase a stock in the short-term, much less trying to figure out how something is likely to perform a year from now. The entire point of purchasing stock that you can sell in the long-term is to help you make money, not lose it. When you look at not only the numbers for this particular stock, but also the foundation of the business itself, you’re likely to notice a lot of cracks in that foundation. As a matter of fact, there is every chance that you’ll start to notice a pattern of the company depending on government programs to keep it afloat and when those programs fall through, the company starts to experience financial difficulties. It’s easy to jump on board with these types of companies because there is no question that the situation concerning the way that we consume energy must change. The sooner it changes, the better for everyone involved. However, that doesn’t mean that the actual process of changing things is easy, nor is it always effective. All you have to do to prove that fact is look at the countless numbers of companies just like this one that have come and gone over the last several years. Every single one of them had set out to accomplish great things and the overwhelming majority of them are now nothing but a distant memory. Why does this happen? It largely comes down to the fact that finding new ways to use energy that are environmentally friendly is not necessarily the easiest business to be in. The technology is expensive and it’s constantly evolving. As soon as a company develops something, there’s new technology that might allow them to work even more efficiently, yet there’s a huge investment involved in order to get that technology so that everything is up to par. In short, companies of this type are often playing catch-up and when it comes to their finances, they’re usually spending a lot more money than they’re able to make in the immediate future. The very nature of the business itself more or less sets them up for failure. That’s why there’s very few of them that actually perform well. When you have a company like this one that depends so much on government programs to help keep it afloat, everything hinges on those programs being carried out exactly as they were proposed. That’s something that rarely happens, if ever. When things fall through, the company ends up in a tailspin and that performance is reflected in the stock market.

Will Things Turn Around?

Right now, about the only thing that this particular stock seems to have going for it is that you can purchase it for less than $5 a share. However, that doesn’t mean that you should run out and buy a bunch of shares in hopes that it will go up and you can make some money. As a matter of fact, most stock market analysts agree that you shouldn’t even consider purchasing this stock if you plan on holding on to it for more than about 30 days. At the very longest, they recommend selling it before you hit the 60-day mark because they expect that things are going to continue to get worse. For most investors, even this advice seems a bit confusing. Why would you purchase something that you have to get rid of within the next month or two or you risk losing your shirt? Furthermore, when you look at the analysis that says that the stock is predicted to decline by another 46% to 47% within the next 30 days, it doesn’t make any sense at all to consider purchasing this stock. It’s highly likely that if you do, you’re going to end up stuck with something that you can’t sell for a profit and therefore, you have no choice but to hold on to it indefinitely and hope that it will eventually go back up. Considering the volatility of this particular market in general and more specifically, the company itself, that seems like a risky prospect, even under the best of circumstances.

There are times when you look at a stock as a potential long-term investment and practically everything about it tells you that you should buy it right now because you’re getting in on something that’s eventually going to be very profitable. Much more frequently, you look at stocks and carefully analyze them from every potential angle, trying to find something in there that gives you an indication of whether or not you should purchase them as a long-term investment. After all, it can be a very difficult decision when trying to decide whether or not something is going to be profitable later on down the road. In this particular case, there are warning bells going off all over the place that practically scream that you should avoid this stock at all costs, no matter if you plan on selling it in three weeks or three years. It just doesn’t make sense to invest your money in something that is showing a consistent downward trend. This is especially true when it is predicted to lose so much of its value that it’s worth almost nothing by the time it’s all said and done.

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