The market operates on a forward-looking framework. As such, investors may be hesitant to chase Ballard Power Systems (BLDP), which engages in the design, development, manufacturing, sales and servicing of fuel-cell products. Earlier, it made an announcement regarding its largest-ever order. However, since that’s now in the past, BLDP stock doesn’t seem a great buy. However, speculators may be able to milk something.
Let’s look at the facts. First, Ballard shares soared on the signing of a long-term supply agreement (LTSA) with its customer Solaris Bus & Coach, a leading European bus manufacturer. The terms of the deal call for the supply of 1,000 hydrogen fuel-cell engines through 2027 for the European transit bus market. Subsequently, BLDP stock spiked almost 18% on Monday.
While that’s encouraging, another set of facts do not particularly bode well for Ballard Power. Currently, analysts only rate BLDP stock a consensus hold and that’s hanging by a thread. Indeed, there’s only one moderate buy rating to break up 12 holds and three strong sells. Also, the mean price target of $3.81 (16.5% higher from Monday’s close) could be considered deceptively high.
That’s because of another not-so-pleasant fact: since the beginning of January, BLDP stock is down more than 10%. Over the past 52 weeks, Ballard shed almost 41% of equity value. If the company was supposed to convince investors of the viability of hydrogen fuel cells, it’s not doing a great job.
For these and other reasons, it’s notable that BLDP stock slipped during Monday’s afterhours session. Nevertheless, for the bold speculator, an opportunity could exist.
BLDP Stock Call Options May Entice the Aggressive Gambler
Unsurprisingly given the context, BLDP stock ranked as one of the top highlights in Barchart’s screener for unusual stock options volume. This screener is particularly valuable because it shows where the smart money may be putting its funds. For Ballard, total volume reached 4,361 contracts against open interest of 13,266.
Notably, the volume spike represented a 584.62% lift against the trailing one-month average metric. Further, call volume reached 3,710 contracts against put volume of only 651. On paper, this pairing yields a put/call volume ratio of 0.18, indicating strong bullish sentiment.
A quick look at Barchart’s options flow screener – which exclusively filters for big block transactions – shows that options with bullish sentiment slightly outweigh those with bearish sentiment. Therefore, the put/call ratio needs to be taken with a grain of salt. Nevertheless, the data suggests more optimism than pessimism.
Still, the concentration of bearish pressure against BLDP stock is notable. According to Barchart’s Trader’s Cheat Sheet, the upside resistance levels are as follows:
- Pivot Point 3rd Level Resistance: 3.69
- Pivot Point 2nd Level Resistance: 3.50
- Price 3 Standard Deviations Resistance: 3.50
- Price 2 Standard Deviations Resistance: 3.46
- Price 1 Standard Deviation Resistance: 3.40
- Pivot Point 1st Resistance Point: 3.38
Of course, what’s noteworthy here is that BLDP stock – which closed at $3.27 on Monday – faces multiple hurdles to get to the psychologically significant $4 milestone. Right now, the bears appear entrenched so it would be difficult to break through.
However, BLDP also features relatively elevated short interest (at 9.19% of its float) and a very high short interest ratio of 22.98 days to cover. If shares start to swing northward, this may panic the bears, with many possibly moving to cover their position. Under such a scenario, the upside resistance barriers could fall like dominoes.
It is super risky, to be clear. However, if you do believe in the domino hypothesis, the Aug 16 ’24 4.00 Call – priced at a premium of 25 cents on Monday – seems intriguing. Again, should the hypothesis outlined above pan out, speculators could potentially enjoy a mix of intrinsic and time value.
Financial Projections Aren’t Half Bad
Interestingly, BLDP stock could also offer a long-term canvas for speculation. Analysts believe that for the current fiscal year, revenue will land (on average) at $114.82 million. That would be 12.1% up from last year’s print of $102.4 million. Also, the most optimistic target for the top line stands at $133.43 million.
For fiscal 2025, the consensus sales projection calls for $167.11 million. And the high-side estimate is looking at $224 million. Are these pie-in-the-sky numbers? There’s a lot of work that needs to be done and plenty of things need to go smoothly.
Still, we’re also talking about a global arena that could command a valuation of $36.41 billion by 2029. If so, that would represent a massive compound annual growth rate of 29.7%. BLDP stock isn’t for everyone, that much we can all agree on. However, gamblers should keep it on their watch list.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
