Why FuelCell Energy, Atlantic Power, and Sonic Jumped Today

Tuesday started out looking a lot like Monday did, with early gains giving way to greater nervousness. Yet unlike yesterday, the stock market managed to recapture those early gains and post a solid advance for the session, bolstered by positive news on the consumer front. Yet even the Dow's nearly 100-point rise was modest compared to the advances that FuelCell Energy , Atlantic Power , and Sonic managed to give their shareholders today.

FuelCell technology used at a Dominion Resources plant in Bridgeport, Conn. Source: Dominion Resources.

FuelCell Energy jumped 20%, yet in some ways, that was actually disappointing to some shareholders in light of the action elsewhere in the space. After having whipsawed in both directions lately, the CEO of Plug Power said that the fuel-cell maker had gotten an order from a global automaker. Despite CEO Andy Marsh's failure to elaborate on the potential deal, traders chose to take the news as a sign of huge optimism, sending Plug shares up almost 50% on the day. That optimism spread throughout the sector, as Ballard Power Systems also posted a sharp gain of 32% on Plug's news. At this point, speculative fervor has taken over the fuel-cell industry, making it difficult for long-term investors to get a solid read on the sector. When even hints of positive news can send stocks soaring, the risk level in a particular stock is almost always higher than ordinary investors should take without being fully prepared to suffer potentially catastrophic losses.

Atlantic Power gained almost 10% after the utility company said that it would boost the size of its tender offer to repurchase some of its outstanding debt. The company said that in addition to its original $150 million offer, private negotiations had led to another $140 million in repurchases of Atlantic Power's 9% senior notes maturing in 2018. The company has managed to sustain a dividend that currently yields about 12% at present share prices, but debt remains a big issue for the company. As a result, though, refinancing efforts could allow Atlantic Power to take maximum advantage of current low rates and put itself in the best position to profit in the future.

Sonic climbed 12% after the restaurant chain reported solid earnings last night. Adjusted earnings beat expectations by a penny per share, overcoming sluggish revenue growth that might well have come from weather-related issues for the drive-in-themed chain. Even with weather considerations, same-store sales rose 1.4%. Moreover, the company believes that the second half of its fiscal year could look even brighter, as its novel approach to the business draws customers. Interestingly, although several analysts made positive comments about Sonic's results, they nevertheless are unsure about the chance for further share-price appreciation, with some price targets actually below the current price of the stock.