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Ballard Power is (once again) on the rise

Rafal Gerszak/The Globe and Mail

After disappointing so many high hopes more than a decade ago, Ballard Power Systems Inc. is a stock many investors would like to forget.

Yet, the fuel cell maker is once again drawing interest as its share price rises to levels not seen in a couple of years.

Ballard shares have risen by about 17 per cent in the last month and more than 240 per cent since the start of the year, buoyed by renewed interest in the alternative energy sector.

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On Wednesday, shares of the company, based in Burnaby, B.C., rose 11 per cent on more than double the average daily volume over the past three months, before closing up 4 per cent to $2.13 on the Toronto Stock Exchange.

While that's a far cry from when Ballard traded near $200 in 2000, the company is a much different enterprise today.

Ballard no longer touts a grandiose vision of trying to put fuel cells in every vehicle.

Instead, it's focused on selling the technology for such commercial uses as backup power systems, forklifts and buses.

"If you got back to the Ballard dream 10, 12, 15 years ago, it was a dream," chief executive John Sheridan said in an interview on Wednesday.

"Our world now is to say 'Don't invest in a dream, invest in commercial realities.'"

He points to recently signed deals for telecom backup systems in high-growth markets in Asia, as well as an agreement to develop fuel cells for use in powering demonstration cars for Volkswagen.

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The VW contract is a four-year deal valued at $60-million to $100-million.

"The fuel cell story has been a slowly evolving story," said Mr. Sheridan. "It has been a tough challenge and it has been several years to make progress, but I think the tide has shifted."

While Ballard's recent run up is impressive, analysts caution investors not to jump in too quickly.

The company is still losing money, but narrowed its loss in the first quarter to $7.9-million (U.S.) or nine cents per share, down from $8.7-million or 10 cents per share a year earlier, while its revenues rose 22 per cent to $12.3-million.

"I don't see them as a good value at the moment," Jeffrey Osborne, an analyst at Stifel, Nicolaus & Co. in New York, said in an e-mail on Wednesday.

"The growth prospects have bounced around the past two years from Brazilian buses to telecom backup to a renewed interest from auto companies like Volkswagen. My key issue is I don't see a sustained path to profitability for the company."

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He has a "hold" rating on the stock, advising investors in a recent note to take a "wait-and-see approach" to Ballard stock.

"We are encouraged by Ballard's initial success in the telecom backup market, the fuel cell bus market globally, and materials handling space … However, it has been a bumpy ride in recent quarters," Mr. Osborne said.

Ballard's share price may be getting a lift from other clean tech companies that have announced positive developments in recent weeks.

Bloom Energy, a privately held California-based firm, is providing fuel cells to power some of Verizon Communication's facilities, while Mississauga-based Hydrogenics Corp. was recently awarded a contract for a fuelling station in Italy.

Nasdaq-traded Hydrogenics was up 3 per cent on Wednesday and has jumped 92 per cent so far this year, while Connecticut-based FuelCell Energy Inc. was also up 2 per cent Wednesday and has increased 36 per cent year-to-date.

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