Tomahawk, WI 03/17/2014 (Basicsmedia) – FuelCell Energy Inc (NASDAQ:FCEL) is a manufacturer of environment-friendly fuel cell power plants. Its hydrogen-based on-site power generation technology is extremely clean and is likely to appeal to companies in states like California. But how far will the stock go and does the company have long-term growth potential? It’s not the only company in the fuel cell business that is witnessing rising stock prices. But it’s important to recognize that every player in clean technology or fuel cells is not going to be a mega-success story like Tesla Motors Inc (NASDAQ:TSLA).

All Round Positive News

The 1Q2014 results had many positive aspects to it. It reported total revenues of $44.4 million for 1Q2014, versus $36.4 million for 1Q2013. Product sales for 1Q2014 rose to $34.5 million from $29.1 million for 1Q2013. Gross profit for 1Q2014 was $2.2 million, versus $2.3 million of gross loss in 1Q2013. Loss from operations for 1Q2014 declined to $7.6 million from $11.1 million for 1Q2013.

FuelCell Energy Inc (NASDAQ:FCEL) reported a cash, cash equivalents and restricted cash total of $104.6 million as on January 31, 2014. New plants have been completed in the U.S. and South Korea as well as Europe and more will be coming on stream in April 2014. The company announced that a “tri-generation fuel cell plant will be installed at the Company manufacturing facility in Torrington, Connecticut during 2014 under a U.S. Department of Energy Advanced Manufacturing Office program to demonstrate distributed hydrogen generation for industrial applications.” A data center power generation project is undergoing commissioning in Wyoming.

Clouds on the Horizon

Despite all the good news above, there are clouds on the horizon. Total backlog stood at $326.8 million as on January 31, 2014, versus $428.3 million on January 31, 2013. This decline in the order book in what is a low margin business cannot be considered a good omen for the future. Also, the company’s fixed FuelCell Energy Inc (NASDAQ:FCEL) power generation plants are not revolutionary and not based on any great fundamental advances in energy production. With shale oil, natural gas from tar sands and clean diesel, both the availability of traditional non-renewable fuel is increasing while the demand for them moderates because of ever more efficient engines and stringent emission norms. With President Obama recently announcing new fuel economy standards for trucks to be put in place by 2018, traditional fuels will have to become even more environment-friendly hence making the case for fuel cells and other alternative sources of energy that much more difficult.

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