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Why Ballard Power Systems Surged Today

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of fuel cell technologist Ballard Power Systems (TSX:BLD) soared 11% today after its quarterly results and outlook topped Bay Street expectations.

So what: The stock has skyrocketed over the past year on optimism over growing fuel-cell adoption, and today’s Q4 results — adjusted EBITDA swung to $0.2 million vs. a year-ago loss of $3.2 million as revenue climbed 5% — coupled with upbeat guidance only reinforce that momentum. In fact, gross margin expanded 600 basis points sequentially to a solid 34%, suggesting that Ballard’s cost structure and competitive position is improving in the process.

Now what: Management now sees full-year revenue growth of about 30% on breakeven adjusted EBITDA. “The Company expects the positive growth trends in 2012 and 2013 to continue in 2014 with a similar trajectory, as Ballard continues to pursue its growth strategy for fuel cell product sales, engineering services and IP licensing,” said Ballard.

Of course, when you couple Ballard’s still-speculative business model with the stock’s red-hot stock price — now up a whopping about 400% from its 52-week lows — average investors would do well to stay on the sidelines.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Brian Pacampara does not own shares in any company mentioned.

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