Canada’s premier stock market introduced the TSX30 in 2019. The flagship program recognizes the 30 top-performing TSX stocks over three years. The annual list of winners serves as a buying guide for growth investors and bullish speculators.
Ballard Power Systems (TSX:BLDP) made the inaugural list (rank 12) and the two succeeding two years (2nd and 4th in 2020 and 2021). However, the top growth stock for three consecutive years was absent in 2022 and 2023. Last year was forgettable given the perennial winner’s 23% loss.
At $4.07 per share, the industrial stock is down 17.1% year to date. Still, despite the underperformance, BLDP remains a quality stock. Following recent business developments and new growth drivers, 2024 could be the turnaround year for the developer of fuel cell products.
Furthermore, Ballard Power’s addressable market is enormous. According to Fortune Business Insights, the global fuel cell market could top US$36.4 billion by 2029, a compound annual growth rate (CAGR) of 29.7% from 2022. Some market analysts see potential revenue and earnings growth rates of 30.3% and 10.3% per annum, respectively.
Financial results and business outlook
In 2023, revenue increased 25.1% year over year to US$102.4 million, and net loss from continuing operations improved 10.1% to US$144.2 million versus 2022. Total operating expenses rose 2.2% to US$149 million. Management said it did not provide revenue and net income guidance for 2023 (or 2024) in view of the hydrogen fuel cell’s early-stage development and adoption.
Ballard Power Systems is the acknowledged leader in PEM (proton exchange membrane) fuel cell technology and products. For 2024, the $1.2 billion company plans to continue investing in next-generation products, advanced manufacturing, and production capacity expansion.
Management expects revenue weights this year to be similar in 2023, around 30% in the first half and the bulk or 70% in the second half. The expectations for 2024 include the approximately $66.6 million 12-month Order Book from the $130.5 million Order Backlog as of December 31, 2023.
Besides doubling down in the fuel cell stack and module, Ballard’s ongoing concern is to accelerate market development, create new partnerships to accelerate hydrogen and fuel cell market adoption, and grow product sales volumes.
Another goal is prioritizing investments in North America and Europe and winning market shares in the regions. China is closely watched for future investments.
Largest order in history
Ballard cinched the largest order in the company’s history. On April 1, 2024, it announced signing a long-term supply agreement (LTSA) with Solaris Bus & Coach. Under the LTSA, Ballard will supply the European bus manufacturer with 1,000 hydrogen fuel cell engines through 2027 for the European transit bus market.
Its President and CEO, Randy MacEwen describes the deal as a landmark agreement. Delivery will start this year. The US Department of Energy’s Hydrogen and Fuel Cell Technologies Office has also notified and recommended Ballard for two grants worth US$40 million.
Under the Clean Hydrogen Electrolysis, Manufacturing, and Recycling Program, Ballard will construct the “Ballard Rockwall Giga 1” in Rockwall, Texas.
Return to the winner’s circle
Ballard Power Systems was conspicuously absent from the 2022 and 2023 TSX30 Lists. However, its latest landmark agreement in Europe is a growth driver. The construction of an integrated fuel cell production facility assures its return to the winner’s circle.
