Are the stars finally aligning for Ballard Power?

Cleantech stock Ballard Power Systems (Ballard Power Systems Stock Quote, Chart News TSX:BLDP) has been on a spectacular run over the past couple of years but it may not be done yet. Portfolio manager Zach Curry says with the battery power sector will likely stay strong going forward, there could be more upside to Ballard.

After what seemed like years of being a wait-and-see prospect, makers of fuel cell stacks and systems for heavy transportation vehicles Ballard Power has had a string of catalysts over the past year, starting last December with the announcement of a joint venture with China’s Weichai Power and new sales agreements with German telecom company adKor and German power company SFC Energy.

Ballard followed that up this year with new orders for its heavy duty modules for buses in Germany and the UK and then, this past month, a landmark collaboration with German auto parts giant Mahle to develop propulsion systems for trucks.

All that has pushed BLDP into uncharted territory —or relatively so, as the stock, which now trades in the $20 range, was up above $100 per share in the early 2000s, a sign of the huge potential of a technology which only now seems to be finding its feet.

But there could be a lot more bumps in the road ahead, says Curry president of Davis Rea, who spoke on BNN Bloomberg on Thursday.

“Ballard is at the forefront of the renewable energy space with their products, as certainly hydrogen is a part of that renewable space,” says Curry. “The company is volatile in terms of timing of sale of products and adoptability of products, but the renewable space is one that is growing, certainly, and will for the foreseeable future.”

“You really are seeing a very long term transition into that renewable space and Ballard is one of the few Canadian companies at the forefront,” Curry said. “It’s just going to be a pretty long time horizon in terms of adoptability and product generation.”

“Ballard has done remarkably well, and that industry should continue to grow for the foreseeable future. So, positive on the space and the company will be a bit more volatile, for sure,” Curry said.

On the Mahle collaboration, which will see Ballard develop and commercialize with Mahle zero-emission fuel cell systems for commercial trucks, Ballard CEO Randy MacEwan pointed to the $100-billion annual addressable market for commercial truck engines, saying in a press release on September 28, “With our shared vision on the role of fuel cell technology to decarbonize heavy-duty trucks and our complementary
capabilities, we expect this collaboration with MAHLE to result in development and commercialization of winning fuel cell engines for customers in the truck engine market in Europe and beyond, at a time where policies are mandating zero-emission powertrain solutions.”

Ballard has delivered strong quarterly numbers over 2020, including during the COVID- 19 pandemic where the company posted a nine per cent uptick in revenue to $25.8 million for its second quarter 2020.

To say that Ballard’s history contains some drama would be an understatement. The company has alternately been a market darling and goat with very little in-between. The Vancouver firm seemed to be the very definition of the market pun “ten years away from being ten years away”.

But last month, another fund manager said those days could possibly be coming to an end. Appearing on BNN Bloomberg, Jamie Murray of the Murray Wealth Group said that while the stock is still clearly a momentum play, the wind may finally be at its back for good.

“Ballard is a leader in hydrogen fuel cell technology [but] this company has had a couple of false starts over the last 20 years. Is Ballard Power stock still a buy? You get some excitement and the shares run up and then ultimately nothing really comes out of it and it sort of falls away,” Murray said. “But we’re getting the sense that especially with a real push to low or no emission power and energy that the world seems like it’s moving to, that governments regardless of the fact that it seems like the technology is now close enough that whether it’s solar, electric or hydrogen these are going to be part of our future, and Ballard is the go-to company to invest in that right now.”

But Murray cautioned that he expects anything but a straight line to success.

“I think it’s going to be a bumpy ride and this is going to be a volatile stock. The expectations are high, but I think the expectations are going to continue to increase and so that should be good for Ballard,” he argued. “It’s not one that we own right now but it’s one that we’re starting to look at. It does feel like we’re closer to a hydrogen powered future than, say, ten years ago, so that should be good for Ballard,” Murray said.