FuelCell Energy (NASDAQ:FCEL) saw its shares close at a high of $27.96 in early February. Since then, the story has been much less impressive, with the stock in a long slide. At this point, FCEL stock is trading for $6.71, down 76% from its February high. Shares are also down 40% for the year. So, not quite what investors envisioned when they bought into this fuel cell power plant company. However, over the past few weeks there have been some positive signs, including a big pop on September 14 based on an encouraging earnings report.

When it was going for nearly $28, the long-term growth prospects for FCEL stock were a little dim. Any big benefits from the government’s green energy and infrastructure initiatives were probably built-into that price. In addition, the company was having trouble showing revenue growth, let alone progress toward profitability. However, given its current price and FuelCell’s latest quarterly earnings results, is now the time to make a move on FCEL stock?

FuelCell’s Green Energy Cred

The key element of the FuelCell Energy story is its position as a clean energy source. The company builds micro-scale power plants that run using fuel cell technology. They are currently in use at locations such as hospitals and manufacturing sites.

Last October, FuelCell was awarded $8 million in funding by the U.S. Department of Energy to develop a SureSource fuel cell plant to produce hydrogen for fuel. In April, FuelCell announced that its SureSource fuel cell power plants had generated 12 million MWH of electricity since their first commercial installation. Its technology was credited with avoiding over 1.5 million tons of CO2 emissions.

Thus, the company’s green energy credibility and the government’s priority of spending big to achieve a net zero-emissions economy is what helped power FCEL stock to such lofty heights in February.

Third-Quarter Earnings Show Big Improvements

One of the biggest concerns about FuelCell has been its ability to grow its business and ultimately move toward profitability.

In the first quarter, the company reported revenue of $14.9 million — down from $16.3 million the year before. That was a big miss, with the market expecting to see revenue in the $22 million range. Its loss of 15 cents per share was also a big miss. In addition, the company was burning through cash. InvestorPlace contributor Mark R. Hake pegged the total cash burn for Q1 at $34.89 million. In Q2, revenue dropped again. And through this, FCEL stock was losing ground.

On Sept. 14, FuelCell reported its Q3 earnings. And for a change, there was a glimmer of hope for investors. Revenue was up 43% year-over-year, at $26.8 million. Adjusted losses per share were 4 cents. Both numbers handily beat Wall Street estimates. FCEL stock closed up nearly 15% on the news.

This was only one quarter, but it raises the possibility that FuelCell has turned a corner.

Bottom Line on FCEL Stock

Overall, FuelCell can be a divisive stock among investors. The company clearly has potential, and as a part of the renewable energy club, shares saw impressive growth to start the year. However, its lack of meaningful revenue growth combined with a high cash burn rate has raised concern. Worried that the company may never achieve profitability, many investors cashed out. That’s why we saw FCEL stock drop 74% in three months in the spring.

At this point, I feel the positives about FuelCell are beginning to outweigh the negatives, especially for investors who think long-term. The company’s Q3 earnings were a big improvement and beat market expectations. The government’s infrastructure bill has been delayed yet again, but is expected to be passed by the end of the month. That is going to boost spending on “green” energy projects — an obvious plus for FuelCell.

The bears are currently in the majority for FCEL stock, still hung up on the issues mentioned. The investment analysts polled by the Wall Street Journal have FCEL rated as “underweight” with an average $6.89 price target. Currently trading at $6.71, FCEL stock remains up 156% over the past 12 months. So there’s definitely room to slide further. In fact, one of the WSJ analysts has a $3 price target.

On the other hand, there are those recent positives for FuelCell, plus its “A” rating in Portfolio Grader. With the push toward green energy gaining momentum and its current price, the long-term growth potential for FCEL stock is very real.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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