Is It Too Late to Buy Bloom Energy Stock?

It never fails to amaze when a stock grows triple digits in a short period of time. To my mind, it recalls those time-lapse videos of flowers blooming – a weeks’ worth of growth compressed into a few seconds of tape.

Bloom Energy (BE 0.46%) is one of those rare clean energy stocks that has skyrocketed triple digits since last March. If you had invested $10,000 in Bloom last year, your investment would be worth $67,100 today (March 2).

Expand

NYSE: BE

Bloom Energy

Today’s Change

(-0.46%) $-0.76

Current Price

$164.02

Key Data Points

Market Cap

$46B

Day’s Range

$158.10 - $165.88

52wk Range

$15.15 - $180.90

Volume

2M

Avg Vol

12M

Gross Margin

30.89%

Of course, whenever a growth stock takes off in a short period, it’s wise to ask if there’s still some runway left. In the case of Bloom, the picture is murkier than one would like.

On the one hand, Bloom is solving a critical problem in the U.S.’ infrastructure. The country is building energy-intensive technology (artificial intelligence) on an old utility grid that is incapable of supporting it. Data centers are springing up in Virginia, Texas, Ohio…indeed, wherever there is space, and local communities are growing more concerned about energy bill inflation.

Image source: Bloom Energy.

If it’s grid-less power that data centers need, Bloom has an answer: solid fuel cell systems for on-site power generation. These box-like servers convert fuel (like natural gas) into electricity through an electrochemical process without combustion. The company already has blue chip customers – some within the data center space – and it carries an impressive $6 billion order backlog. It’s currently profitable, and revenue growth is expected for the next two years.

Data by YCharts

Bloom’s servers have generated a lot of market excitement. That’s been a boon for its stock, though, to be sure, expectations may be running ahead of fundamentals. The stock trades at over 112 times forward earnings and 18 times sales. That’s five times more than the energy sector for both ratios.

Artificial intelligence, of course, is a technology we’ve never experienced before, and an energy stock like Bloom could continue to surprise.

My stance, however, is more conservative. A lot of good news is already baked into the price. It’s a buy for long-term moderate growth, but don’t expect it to repeat the triple-digit explosiveness in a short period.