FuelCell Energy Inc (FCEL) Rally Rewards Bullish Holdouts

FuelCell Energy Inc (FCEL) was given the green light to build the largest fuel cell power plant in the world

Jan 8, 2016 at 11:38 AM
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FuelCell Energy Inc (NASDAQ:FCEL) remains on the short-sale restricted list after dropping nearly 14% yesterday, but the stock has effectively retraced its losses after Connecticut OK'd the company's plan to build the biggest fuel cell power plant in the world. At last check, the shares were up 15.9% at $6.16, after earlier flirting with a 33% gain.

In FCEL's options pits, long calls have been extremely popular. Specifically, across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 11.72 calls for every put in the past 10 sessions.

They're not the only ones taking a glass-half-full perspective on FCEL. In fact, all three analysts tracking the alternative energy stock rate it a "strong buy," while its consensus 12-month price target of $16.67 sits in territory not charted since last March.

On the other side of the fence are short sellers, who have grown increasingly active on FCEL. During the last two reporting periods, short interest shot nearly 33% higher, and now accounts for 15% of the stock's float. At typical trading volumes, it would take over one week to buy back these shorted shares. In fact, some of the aforementioned call buyers may be short sellers purchasing protection.

Based on FuelCell Energy Inc's (NASDAQ:FCEL) technicals, it's hard to argue with the shorts. Today's surge excepted, the shares have tumbled over the past 12 months. Since this time last year, the stock is down 64%.

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