The Business Review's Barbara Pinckney wrote an interesting article about Plug Power ($PLUG) titled "5 Questions for a Happy Andy Marsh".
The article ends with Marsh saying "I would be watching sales over the coming months. Watch where sales are coming from."
A critical piece to our $PLUG investment thesis is the impressive client list. Well-known companies like $WMT, $KO, $SYY, $PG, and others are buying Gen-Drive units to power forklifts at distribution and assembly centers. For the most part, conversion to $PLUG powered centers has been on a limited or test basis. We find it interesting that $WMT has eliminated its battery room in its latest deployment of $PLUG's solution. If this was an experiment, it would have most likely kept its battery room.
Andy's comment leaves open the possibility that a big customer may be rolling out hydrogen-powered forklifts at multiple centers on a more widespread basis. Let's use $WMT as an example, although we could use any of the above listed customers here. Currently, $PLUG is in just a handfull (less than 5) of $WMT's 168 nationwide distribution centers. If $WMT were to announce a multi sites deal with $PLUG, it would mean significant revenues. On average, each of $WMT's 168 centers have more than 100 forklifts. Assuming $PLUG sells its solution for $18,000 a unit, this business has at least $300 million of revenue potential. In addition to direct revenue, this kind of buy-in from a company like $WMT would be a "proof of concept" as to the benefits of the $PLUG product. These two factors, in our opinion, would serve to move the stock much higher.
Of course, we have no direct evidence that $WMT (or any customer, for that matter) is signing up for $300 million of GenDrive units this year. We are merely pointing out the potential opportunity here, should a customer increase the pace of $PLUG solution deployment.
Here is what Marsh said during the first quarter earnings conference call:
We are also quite excited to announce that the Wal-Mart Washington Courthouse Ohio Distribution Center completed deployment of over 250 GenDrive units powering their forklift truck fleet and have removed their battery room. 3 or 4 of our largest customers discussing multiple distribution centers, up to 5 in some case, where they're looking to migrate to fuel cells, where they're working through their expansion plans internally. (Source www.seekingalpha.com)
All it takes for a spiky catalyst is one or more clients going in for multi site solutions. Can you visualize the catalyst?
Written by Michael Bigger. Follow me on Twitter and StockTwits.
Disclaimer: Bigger Capital, LLC, Bigger Capital Fund, LP, Bachelier, LLC and the Bigger family hold about 3% of Plug Power. We intend to increase our position if the company's results track our benchmark.
Plug Power is a highly distressed situation and it is not suitable for the majority of investors. The likely outcome of an investment is a loss of principal.