Tuesday, April 2, 2013

Ballard Power Systems Inc

On my other blog I am today writing about Turnaround Situations continue...

I do not own this stock of Ballard Power Systems Inc. (TSX-BLD, NASDAQ-BLDP), but I did once. I fell in love with the idea of cars running with fuel cells. I could help save the environment and also make some money. It was very attractive. However, it did not work out. I probably should not have bought this stock based on an attractive new technology that would save the world.

I bought the stock in 1997 and at first it soared. However, by the time I sold it in 2006, I had a loss of 5.3% per year or a total 38% loss on my purchase. It is too bad, but it was a great idea. It was a good job I sold when I did because the current price is some 92% less than my purchase price. I did not have much invested, so I did not lose much. However I no longer buy small caps with good ideas. I want them also to be earning money and pay dividends. Why I did not invest much was that I generally test out stocks before I get into them in a major way.

The problem with analyzing this stock is that most ratios are meaningless because the company has no positive earnings and no positive cash flow. They only thing they have is revenue. So, using the Price/Sales per Share Ratios, I get a 5 year median P/S Ratio of 2.95 and a current one of 1.47. Since the current one is only 50% of the 5 year median Ratio, it means the stock is cheap. The above current P/S Ratio is based on $62M Revenue estimates for 2013 and the current stock price of $1.02.

I can also look at the Price/Book Value per Share Ratios. The 10 year median P/B Ratio is 1.00 and the current P/B Ratio is 1.47. The current P/B is some 46% higher than the 10 year median and suggests a rather high price. A problem with Book Value is that the Book Value on this stock has been decreasing rapidly.

When I look at insider trading, I find a small amount of both insider buying and insider selling. There are options and a number of option type vehicles like Deferred Share Units, Restricted Share Units, Units Deferred Share Units and Units Restricted Share Units. The CEO has shares worth $.7Mand has options are worth $4.2M. The CFO has shares worth $0.1M and has options worth $1 M.

When I look for analysts' recommendations, I find one Hold recommendation. The 12 month stock price consensus is $1.00. This implies no real change in stock price over the next year. However, I should point out that there seems to be only 1 analyst following this stock.

Ballard Power Systems shares soared in March 2013 on deal with Volkswagen. However, the stock only did soar initially and then it returned prior levels. See the article in the Vancouver Sun . This occurred several times when I had the stock. A number of car companies were interested in the technology. However, after a while they lost interest and Ballard was just doing stuff with generating electricity.

I am still following this stock as I find the fuel cell concept interesting. However, it is hard to say if this company will ever make any money for shareholders. It certainly was not the company's fault that the stock price soared so high in the tech bubble of 2000. It has occasionally made money, but whether or not this company will ever be profitable is hard to say. See my spreadsheet at bld.htm.

Ballard Power Systems Inc. is engaged in design, development, manufacture, sale and service of fuel cell products for a variety of applications, focusing on motive power (material handling and buses) and stationary power (back-up power and distributed generation). It is also engaged in proton exchange membrane (PEM) fuel cell development and commercialization. Its web site is here Ballard.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.


  1. Spot on, nothing to add, invested in BLDP for the same reason. See also articles about the hype cycle.
    I own this stock at $1,10 only 1000x, wont loose sleep over it. Maybe one day....
    But you are right, I have invested in private companies as well in the pre-market/product development stage. I guess you need about 10 or 20 of these, hoping one of them will be a Google ;-)