After posting a 19% year-over-year increase in revenue to $1.93 million in the second quarter, H/Cell Energy Corp. (OTCQB:HCCC) looks to be headed towards capping the year off in solid fashion. The clean energy company said this month it has recently completed $1.2 million in projects and nailed down another $1.4 million in contracts for various environmental systems and general contracting projects.
Headquartered in Dallas, Texas, H/Cell Energy has subsidiaries in Pennsylvania (PVBJ, Inc.) and Australia (The Pride Group Pty) that are both operationally profitable as they begin to expand operations by more aggressively marketing their renewable energy technology called HC-1. HC-1 combines solar technology with hydrogen energy to provide consistency in off-grid energy storage that eliminates the need for users to rely purely on solar, wind or batteries.
Customers including household names like Gap (NYSE:GAP), Gap’s brand Old Navy, Tapestry’s (NYSE:TPR) Kate Spade and CBRE Group (NYSE:CBRE), not to mention a bevy of others like Queensland Police Service, Gayndah Hospital and Pacific Lutheran College, to name just a few.
HCCC is a stock that can move lightning quick because the company only has 7.6 million shares outstanding, most of which are restricted stock or held by insiders, leaving just 2.1 million in the public float. This is evidenced by the fact that shares shot ahead from a low of $0.40 on September 5 to as high as $1.45 on September 10 on low trading volume.
Shares have slipped back to $0.50 this week, once again showing this volatility both on the upside as well as downside, however at these levels they appear to be building a support based upon recent trading activity. As we can see from Friday’s close, there is strong support at $0.50. This would still serve as a lower-high for HCCC and lend to the contention that the stock looks to be bottoming at these levels and appears ready to begin an uptrend.
To the upside, $1.00 has set up as the first real resistance for the stock. Because of the limited trading history, the market seems to view the next resistance level up at $1.40.
With any stock that is thinly traded, like HCCC is, the technical chart is not a “be-all-end-all,” but it does provide some good ranges to look for bottom support as entry points. The resistance levels are valuable in watching for them to turn into support when they are broken, which is one of the cardinal rules of technical analysis.
Fundamentally, the legacy businesses of H/Cell are performing well to serve as scaffolding for growth into renewable energy sales of HC-1 via existing customers and entrance into new markets. 2019 sales should easily beat the company’s current market capitalization of $3.83 million, representing a value proposition for a company with plenty of headroom for growth.