Why Did Ballard Power Systems Stock Just Pop?

Key Points

• H.C. Wainwright doubled its price target on Plug stock today.

• Plug stock shot up -- and so did stock in its rival Ballard Power.

• Investors may not realize Wainwright actually prefers nuclear stocks over hydrogen stocks.

• 10 stocks we like better than Ballard Power Systems ›

Ballard Power Systems (NASDAQ: BLDP) stock soared 25.1% through 12:35 p.m. ET Friday after analysts at investment bank H.C. Wainwright raised their price target on Ballard rival Plug Power (NASDAQ: PLUG).

Wainwright more than doubled its price target on Plug stock this morning, from $3 to $7 a share. It said not a word about Ballard. But because Plug and Ballard both operate in the hydrogen fuel cell sector, investors may be thinking that what's good news for one must also be good news for the other.

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What H.C. Wainwright said about Plug stock

"Significant" increases in electricity prices could spur more demand for electricity produced by fuel cells -- that's the crux of Wainwright's argument. Although, as TheFly.com observes, Wainwright actually seems more optimistic about the prospects for nuclear power stocks benefiting from increased power demand.

A second factor working in Plug's favor, as Wainwright observes, is the fact that 31% of Plug stock shares are sold short, which makes it a potential candidate for a short squeeze that could drive its stock price higher. (In fact, I wonder if this is already happening today.)

Is Ballard Power stock a buy?

If it's short squeeze candidates you're looking for, though, Ballard seems a pretty lousy choice. According to Yahoo! Finance data, barely 4% of Ballard shares are sold short -- just one-seventh the short interest at Plug. This is a key difference between the two fuel cell stocks, and it's a good reason to question today's momentum-driven stock price rally in Ballard Power.

Add in the fact that Ballard stock is unprofitable today, and no one on Wall Street sees the company ever turning profitable (at least as far out as 2031), and I'm afraid Ballard stock remains a sell for me.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.