The Canadian stock market began 2023 on a positive note, with the main TSX index rising by 5% in the first two weeks of January. Despite ongoing economic uncertainties and the possibility of a looming recession, investors appear confident that the new year will be better for stocks than the last. This renewed optimism may be the reason for increased buying across sectors in the past two weeks.
One Canadian stock that may offer great potential for investors is Ballard Power Systems stock (BLDP:TSX). The Burnaby-based company, with a market cap of $2.4 billion, delivered outstanding returns of over 800% in 2019 and 2020. However, in the following two years, the stock experienced a 78% decline due to weak sales in China and Europe. Despite this, Ballard Power Systems stock has started 2023 strong, with a 26% increase in the first two weeks of the year to $8.06 per share. Bay Street analysts predict that the Ballard Power Systems stock price could reach $17.03 per share in the next 12 months, representing an upside potential of 111%.
Ballard Power Systems has been designing, developing, and manufacturing proton exchange membrane fuel cells for over four decades. These fuel cells are primarily used in electric mobility solutions such as buses, trucks, trains, and marine vessels. The company has a geographically diverse business model, with 41% of its total revenue coming from Europe, 37% from China, and the remaining from North America and other countries.
Analysts expect the company’s sales to grow by 22% in 2023 to US$108.8 million. By increasing its focus on product standardization in recent years, the company hopes to achieve increased efficiency in manufacturing and supply chain as well as economies of scale in the coming years. Additionally, the continued growth in demand for clean energy may boost the demand for Ballard’s fuel cells, further driving its financial growth. These factors make Ballard Power Systems stock a strong candidate for investment in 2023.