Plug Power (NASDAQ:PLUG) stock has tumbled 27% this year, down 57% over the last 12 months. Indeed, many short sellers have gravitated to the name because of its high price-sales ratio of 11-times.

However, Wall Street, as it tends to do, is focusing on the trees and ignoring the forest. Thus, I think analysts are overemphasizing risks regarding this very well-positioned company.

Poised to Become a Green Hydrogen Superpower

Plug Power is well on its way to becoming a massive supplier of green hydrogen, which is poised to become a hugely-important energy source over the long term. The company has already signed deals to supply the fuel to Walmart (NYSE:WMT), Amazon (NASDAQ:AMZN), and hydrogen truck maker Nikola (NASDAQ:NKLA) within the next two years. Additionally, the firm was slated to launch its first green hydrogen plant in Georgia “early” this quarter, with plans to open two more by the end of this year and another two by the middle of 2024. Also noteworthy is that Plug is becoming a leading manufacturer of electrolyzers used to make green hydrogen.

Undoubtedly, PLUG will benefit significantly from the Democrats’ climate change law. This law, according to one independent estimate, has helped lowered the cost of producing green hydrogen by almost 50%, to less than $3 per kilogram. That’s only over $1 per kilogram more than the production cost of hydrogen produced using natural gas. Moreover, Plug’s massive supply of green hydrogen benefits shareholders in other ways. The company’s size should improve input costs over time. This should in turn result in lower prices, and higher margins.

Given these points, I am confident that the company can at least come close to reaching its 2026 revenue target of $5 billion. Currently, PLUG stock carries a market capitalization of around $6 billion. However, I believe the Street is tremendously undervaluing the shares.

Green Hydrogen Continues to Proliferate Globally

Many new green hydrogen plants are being built worldwide. This validates the fuel’s cost-effectiveness and the attractiveness of producing and selling. For example, in February, China began building “the world’s biggest green hydrogen plant.” Impressively, this single plant which is expected to generate “20,000 tonnes of green hydrogen per year.”

Additionally, the African country of Mauritania is building a plant is being made that’s expected to yield 1.7 million tons of green hydrogen annually. South Korean companies aren’t missing out on the fun, looking to develop a “green energy export hub” in Australia. In fact, Australia is in the midst of a “green hydrogen boom.” And back in the U.S., Air Products (NYSE:APD) and AES Corporation (NYSE:AES) are building a plant that will create “over 200 metric tons per day (MT/D) of green hydrogen.”

All of this supply build has led to some impressive facts. In 2022 alone, global production of green hydrogen reportedly soared 44% to 109 kilotons

An Overdone Fear Kept PLUG Stock Down

On April 18, KeyBanc downgraded PLUG to “sector weight” from “overweight,” primarily due to the bank’s belief that the company will have difficulty obtaining loans due to a deteriorating credit environment. On April 26, PLUG stock closed at $8.47, versus its close of $9.50 on April 17, the day before Keybanc’s note came out. While the shares climbed back to $9.03 on April 28, I believe that Keybanc’s downgrade has kept a lid on the shares.

However, using common sense to consider these facts, it’s clear that investors aren’t seeing the full investment thesis behind PLUG stock. First, Fed data shows that the total of commercial banks’ commercial and industrial loans changed little from November to March. Moreover, in 2022, Congress allocated $27 billion primarily to support “green banks” created by states. These “green banks” will bankroll environmentally friendly projects, including green hydrogen undertakings.

Finally, from a common sense perspective, with the prices of office buildings headed sharply downward, home prices unlikely to surge soon, and the longer-term outlook of bonds somewhat uncertain, I believe that banks, to prevent their profits from dropping sharply, will look to make more loans to businesses in solid sectors, not less. And the green hydrogen sector certainly appears to be very strong.

As of the date of publication, Larry Ramer owned shares of PLUG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.