Here at The Armchair Trader we are very keen on the alternative energy market, and the prospects a shift to cleaner energy solutions holds for private investors. One stock that has been receiving increased interest in Europe at the moment is Frankfurt-listed Nel ASA (FRA:D7G), although this is in fact a Norwegian hydrogen/clean fuels play.
It is ironic to see an enterprise like this coming out of Norway, which has been blessed with the combined benefits of huge offshore oil and gas fields, and hydroelectric power, but as the country’s sovereign wealth fund has already demonstrated, Norwegians are very focused on the environment.
If you were in Nel shares in March through May you would have done very well already. The stock has moved from just over one Euro to hit peaks of about €2.20 and €2.16 on 13 July and 2 September. Nel ASA stock could be had for €1.42 on 24 September, but the shares now seem to be back into rally mode.
Dedicated hydrogen play with global outlook
If you are interested in ITM Power (LSE:ITM), then Nel may also be worth a look. It is a dedicated hydrogen company that works on solutions that allow for the production, storage and distribution of renewable energy. It is not a new company, with corporate roots stretching back to the 1920s, but it now covers the entire value chain for hydrogen power, from hydrogen productions to fuelling stations. Its objective is to help industries to transition to green hydrogen, including fuel cell electric vehicles.
Nel ASA is the world’s largest manufacturer of electrolysers, with more than 3500 units delivered to more than 80 countries. It is the leading manufacturer of hydrogen fuelling stations in the world, centred on its proprietary H2Station solutions, which are now active in nine countries. The H2Station is considered to be the world’s most compact fuelling station.
Nel completed a private placement of 89m shares back in January, followed by a second offering in April and a third in June. This has helped it to build up a solid capital block which it wants to use to strengthen its market position through accelerated investments in technology and its own organisation. These are manufactured in Herning, in Denmark.
International electrolyser manufacturing
Nel also has manufacturing facilities for PEM electrolysers in the US, and alkaline electrolysers in Norway itself. It is reporting increased interest in its refuelling stations from across the world. For example, this month it announced a purchase order from Everfuel Europe A/S for an H2Station to fuel hydrogen buses in the Netherlands.
Nel shares seem to have been hit in the short term by the bad publicity around Nikola Motor Corp (NASDAQ:NKLA), as Nel had a $30m+ order for an electrolyser PO for Nikola. This does not seem to be having a long term impact on the Nel ASA shares, and if anything seems to have created a short term buying opportunity for investors to load up on more stock. That window of opportunity now seems to be closing as the market obviously wants to see the price at €2.20.
German investor support
The Frankfurt-listed company enjoys a solid backing from German shareholders: it has more than 140,000 private shareholders and over 160 institutional shareholders. It recently nixed a 10m share offering, the latest of several, because the market price was lower than the offer price. This looks to have occurred because of the Nikola fall-out and we could expect a renewed offer further down the line, as the company seems to be in investment mode.
Looking at the long term share price picture, Nel ASA does seem to reflect the investor enthusiasm for hydrogen technology right now. Shares are not far offer their five year high €2.20 in Frankfurt. We’ve seen some spectacular growth since March, but we are probably in for more conservative growth in the next six months.