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By Chuck Mikolajczak, Garima Goel and Sneha Banerjee
March 5 (Reuters) - Shares of Fuel Cell Energy Inc surged as much as 25 percent to a four-year high, the main beneficiary on Wednesday of investors' bet on a cleaner way to power vehicles such as electric buses and forklifts.
U.S.-listed fuel cell makers, already on a tear in recent months, have surged in value since Plug Power Inc announced a contract last week to supply Wal-Mart Stores Inc .
The contract, to supply fuel cells to power forklifts in Wal-Mart's warehouses, has been valued by analysts at $50 million - "not a bad estimate", according to Plug Power Chief Executive Andy Marsh, who spoke to Reuters on Tuesday.
Investors are convinced similar deals will follow as companies ditch lead-acid batteries for cleaner technology.
But uncertainty about the sustainability of their fortunes has also drawn short sellers, who are betting that these stocks are overvalued and will tank.
FuelCell Energy was the most traded stock on the Nasdaq on Wednesday, with more than 94 million shares changing hands by 1453 ET. The stock peaked at $3.40 in early trading, its highest since January 2010.
FuelCell's shares have jumped more than 60 percent over the past five trading days and have more than tripled in the past 12 months, including Wednesday's early gains.
That performance pales, however, when compared to Plug Power's surge of more than 4,000 percent in the past year. Its shares, also among the most traded on the Nasdaq, rose as much as 5 percent on Wednesday, with nearly 48 million traded.
Shares of Canada's Ballard Power Systems Inc have jumped nearly eight-fold in the last 12 months, while those of Hydrogenics Corp have more than tripled. Both stocks rose in early trading on Wednesday, with Hydrogenic's Nasdaq-listed shares hitting a 5.5-year high.
All these stock are expensive according to the Thomson Reuters StarMine Relative Valuation model. Hydronegics has a score of 4 out of 100, FuelCell a 3, Ballard a 2 and Plug Power scores a 1. The lower the score, the more expensive the stock.
Short interest in Plug Power stock is also very high. It jumped by more than 66 percent between Jan. 31 and Feb. 14 to represent about 16 percent of outstanding shares. About 8.6 percent of FuelCell shares are held short.
Short-sellers borrow shares and sell them, seeking to profit by returning them after buying them back at a lower price.
Fuel cells convert hydrogen to electricity, emit only water vapor. They require a constant source of hydrogen and air to generate electricity continuously.
Fuel cell-powered engines do not burn fuel, which makes them an efficient, quiet and pollution-free alternative to combustion engines.
Global fuel cell market revenue is expected to reach $2.5 billion by 2018, according to market research firm MarketsandMarkets. Shipments of fuel cells are expected to jump to 1.1 million units by 2018, from 24,500 in 2012.
"The technology has become more affordable," said Byron Capital Markets analyst Dev Bhangui, who has a "hold" rating on Ballard and a "strong buy" on Hydrogenics.
Latham, New York-based Plug Power has said it expects to be profitable for the first time in 2014 on an EBITDA basis as it racks up orders, which have been pouring in since French industrial gas maker Air Liquide invested in the company last May.
"The space in general has been seeing a lot of momentum just because of new contracts," said Ardour Capital Investments analyst Adam Krop.
"Plug Power announced the Wal-Mart deal and there is speculation there could be more contract wins along those lines."
Plug Power's customers include U.S. grocer Kroger Co, Procter & Gamble Co, Coca-Cola Co and German car makers Daimler Mercedes and BMW.
Ballard is Plug Power's exclusive supplier of fuel cell stacks in North America and some European countries. The stacks convert hydrogen and oxygen into electricity.
Burnaby, British Columbia-based Ballard said last week it expects revenue to increase 30 percent this year to about $80 million. The company also makes fuel cells for use in buses, power backup systems and material handling equipment.
Its shares climbed as much as 10 percent to touch a 5-year high of $5.89 on the Nasdaq on Wednesday before easing back to $5.36. (Writing by Sayantani Ghosh; Editing by Meredith Mazzilli and Ted Kerr)