| Ticker | Company | ±% | Price | Invest | ||
|---|---|---|---|---|---|---|
| FCEL | FuelCell Energy | 4.8% | $8.30 | Buy stock | ||
With the global push for clean energy solutions, interest has shifted toward renewable and sustainable power infrastructures. Getting to a completely green process, however, requires considerable time. While on this journey, companies like FuelCell Energy (NASDAQ: FCEL) act as an intermediary, utilizing a chemical process to convert natural gas or biogas into practical energy with virtually zero pollution.
As one of the biggest publicly-traded fuel-cell operators, FuelCell Energy has a significant market presence. Additionally, the company compels long-term investor consideration for its energy storage systems — an incredibly relevant innovation given the recent Texas winter storm.
How to Buy FuelCell Energy (FCEL) Stock
Garnering tremendous attention in 2020 and earlier this year, FuelCell Energy attracts volumes of analyst coverage and insights. Nevertheless, recent volatility has imposed substantial red ink on FCEL stock, necessitating a careful approach.
It’s a good idea to understand how to buy stocks when considering FCEL or similarly wildly trading security. It’s the nuances which can help mitigate some of the unpredictability when dealing with these high-momentum names.
Step-by-Step Guide
- Pick a brokerage.
Before you can even think about acquiring FCEL stock, you must pick a brokerage to conduct your trades. Because of growing interest in stock trading — helped in no small part by the work-from-home phenomenon associated with the pandemic — virtually all brokerages have standardized certain benefits or incentives.
For instance, it’s no longer unique for an online brokerage to offer commission-free trading. With competition rising, most platforms offer this incentive. Instead, the determination points of choosing from the best brokers comes down to personal matters such as preference and anticipated use of the platform.
If you’re interested in stocks as a means to grow wealth but don’t have the time to watch over your account constantly, then a mobile trading app may be most appropriate for you. On the other hand, if you anticipate expanding your trading and investing acumen, a comprehensively robust platform is the way to go. - Decide how many shares you want.
To determine how many shares you want to purchase, first establish how much you want to spend on your target security. Naturally, this figure is different for everyone and will encompass factors such as risk-reward profile and budget size.
Also, keep in mind that FCEL stock is presently volatile. Therefore, you may want to use a tactic called dollar-cost averaging. Instead of buying all-in at a particular price, buy some shares now but keep the powder keg dry. Later, if the price dips, you can buy even more shares.
Stock market transactions are based on share count, not dollar amount. Take the amount you wish to invest and divide that by the stock’s market price. The resultant whole number is the amount of shares you can purchase. On a side note, some brokers allow you to purchase fractional shares but this is not a standardized feature in the brokerage industry. - Choose your order type.
Because of the constant fluctuations in the market, price has a different meaning in the equities sector than in a traditional retail environment. Also, the rapidly evolving valuations means that you need to specify your order type before you can conduct a deal. Below are the terms and concepts to know.
Bid: The bid represents the highest price a buyer will pay for a stock. It will always be lower than the ask.
Ask: On the other hand, the ask is the lowest price that a seller will take. The ask will always be higher than the bid.
Spread: Also called the bid-ask spread, this is the difference between the bid and ask price. This concept is significant because profiting off the spread is how market makers earn their living. As well, the spread represents liquidity — lower spreads indicate higher liquidity while higher spreads indicate lower liquidity.
Limit order: For maximum control and transparency in your stock transactions, you should opt for a limit order. This order type executes a trade only at your predetermined price. The downside with limit orders is that no guarantee exists that your target stock will reach that price.
Market order: Sometimes, you just want to execute the deal no matter what. In that case, the market order is your best friend, which guarantees a filled order if placed within normal session hours. However, market orders only execute at the next available price and at terms least favorable to you — buy orders on the ask, sell orders on the bid.
Stop-loss order: To protect your portfolio’s total value from the effects of volatility, you can place a stop-loss order on specific stock holdings. Stop-loss orders execute at a predetermined price or the next available price. If the next available price happens to be far lower than the predetermined price — such as during a gap-down session — you will incur a steeper-than-anticipated loss.
Stop-limit order: Stop-limit orders give you greater control and transparency in your protective automated orders by only fulfilling at a predetermined price. This prevents the sometimes nasty surprises associated with gap-down sessions. However, similar to limit orders, you have no guarantee that the stock in question will hit the predetermined price. - Execute your trade.
When you are ready to place your trade, perform the following steps.
For market orders:
• Choose your action type (buy or sell).
• Enter the shares you want to acquire or vacate.
• Hit the execute button.
For limit orders:
• Choose your action type (buy or sell).
• Enter the shares you want to acquire or vacate.
• Set your desired acquisition price.
• Hit the execute button.
Because of the volatility of FCEL stock, order types take on greater importance. If you’re dead set on acquiring market shares, go with market orders. However, because FCEL has a tendency of moving across the map, limit orders afford predictable cost management.
Best Online Brokers for FCEL Stock
Below is a list of the best brokerages for your consideration.
FuelCell Energy Stock History
No question exists that FuelCell Energy stock has been among the top performers of 2020, gaining a very impressive 442%. In large part, investors were excited about the relevant underlying business, particularly what it would mean under the new U.S. administration.
It’s no surprise, then, that FCEL stock truly gained momentum following the 2020 presidential election result.
However, sharply rising stocks tend to correct even more steeply in magnitude. That’s the biggest threat you should worry about before taking a position in FCEL stock. While it takes much work to get a security into the stratosphere, selling pressure tends to evaporate hard-earned valuations at a rapid pace.
Pros to Buying FuelCell Energy Stock
- Relevance: Under President Biden’s plan for clean energy integration and environmental justice, the U.S. will enact policies to become a net-zero emissions society by 2050. That’s not going to happen with combustible energy production processes, which bolsters the argument for FCEL stock and the underlying fuel cell business.
- Expansion: FuelCell not only offers practical clean energy solutions in the domestic market but it has successfully reached abroad. With global metropolitan areas becoming even more crowded, a need for space-sensitive and pollution-free power production has risen. This dynamic naturally suits FuelCell’s business model.
- Storage: Through its hydrogen-conversion process, FuelCell’s battery storage system can harvest energy for long-term storage and distribute it when necessary, such as during peak demand or for emergencies.
Cons to Buying FuelCell Energy Stock
- Economics: While fuel cells offer a promising solution for clean energy production, they present a cost challenge. That’s according to Yale Climate Connection, which reported that the pursuit of economies of scale in the industry requires the purchase of more fuel cells, which are inherently expensive. This causes a Catch-22 dilemma.
- Unprofitable: Despite growing interest and frankly need for clean energy, FuelCell’s financials leave much to be desired. Net income has been negative since at least 2006, while free cash flow is consistently in the red.
- Volatile: Analysts typically consider the current position that FCEL stock is in as a “falling knife.” It’s difficult to know when the selling pressure will fade, making shares a risky gamble.
A Compelling but Highly Risky Trade
Thanks to growing interest in clean energy, FuelCell Energy’s stock has risen dramatically, both literally and figuratively. By taking natural gas or biogas and converting it to practical power while emitting close-to-zero emissions, FCEL is an encouraging transitional step.
The drawback, however, is that fuel cell processes often require nonrenewable energy commodities while the world is aiming for a fully renewable future. Also, profitability concerns for both the industry and FCEL stock specifically weigh on the investment proposition.
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.