Many climate scientists and energy experts agree hydrogen fuel cells are the key to powering our world in the future. These fuel cells produce electricity by combining hydrogen and oxygen atoms. As this technology grows in popularity, hydrogen stocks will get an inevitable boost.
The electrochemical reaction involved produces electricity, water and a small amount of heat in what has been described as the most environmentally-friendly power source available today. The only emission produced by hydrogen fuel cells is water vapor.
Hydrogen fuel cells offer superior power and longevity compared to today’s conventional batteries. They also provide twice the fuel economy of today’s gasoline-powered vehicles. Given the benefits, it is not surprising that a number of companies are leading the charge to bring hydrogen fuel cells into the mainstream.
While the technology still needs to advance and the costs need to come down, many analysts say it is only a matter of time before hydrogen fuel cells are widely adopted. According to Research and Markets, the global hydrogen fuel cell market will grow from $3.85 billion this year to $16.5 billion in 2025 at a compound annual growth rate (CAGR) of 43.8%.
As we ponder what’s to come, here are three of the best hydrogen stocks to bet on for the alternative fuel future:
Hydrogen Stocks: Ballard Power Systems (BLDP)
Ballard Power Systems is a company based in neighboring Canada that has been involved in the development of high-performing batteries since 1979. An industry pioneer, Ballard Power is viewed by some analysts as the original fuel cell developer and a leading creator in today’s electric vehicle (EV) market.
Publicly traded on the Nasdaq exchange since 1995, BLDP stock is up more than 230% from its debut price. However, it has suffered a significant slump over the past year, losing 46% in 2021 to now trade at $12.64 per share.
Some analysts attribute the decline in Ballard Power’s stock to the company’s approach. Rather than focus on electric vehicles sold to consumers, Ballard is making fuel cells for batteries found in heavy-duty vehicles and equipment such as trucks, trains, buses and material handlers.
Ballard Power today is a global company with operations and sales stretching from China to Belgium to the U.S. But the market it is targeting has not yet embraced EVs in the same way traditional automakers, such as Ford (NYSE:F) and Volkswagen (OTCMKTS:VWAGY), have gone all-in on EVs.
However, as the market for fuel cells and hydrogen matures and grows, it should benefit Ballard Power and its shareholders.
Plug Power (PLUG)
One of the companies that is truly leading the charge in hydrogen fuel cell system development is Latham, New York-based Plug Power. PLUG stock recently got a boost following a strong endorsement from a Citi analyst, which put a “buy” rating on the shares and raised its price target to $56 from $35 previously.
A $56 share price would be 91% higher than the $29.16 price at which the stock is currently trading. The analyst sees several tailwinds for Plug Power in the year ahead, including higher fuel gross margins and the anticipated ramp-up of its green hydrogen network in 2022.
Plug Power continues to be in growth mode. It recently opened a new facility in Rochester, New York that it describes as the biggest fuel cell gigafactory in the state. Additionally, Plug Power has developed a partnership to build green hydrogen plants at several locations in Europe. It is also expanding into Asia, starting with South Korea.
Plug Power has collaborated with automaker Renault (OTCMKTS:RNLSY) to release a fuel cell-powered van prototype. It claims the vehicle is the first van in North America to run exclusively on a hydrogen fuel cell.
All the news from the company hasn’t helped PLUG stock, which is down 16% on the year. Hopefully the reversal that’s forecast by Citi comes to fruition.
Hydrogen Stocks: Bloom Energy (BE)
San Jose, California-based Bloom Energy is another leader when it comes to hydrogen fuel cells. The company uses solid oxide technology to produce hydrogen using electricity, a process that many analysts have called true green energy.
Like the other companies on this list, Bloom Energy has scored some meaningful wins over the past year. Most recently, it announced the government in India will use its technology to develop that country’s first hydrogen-based energy storage project. The company is also experimenting with using its hydrogen fuel cells to power big, energy-intensive cruise ships.
For 2021, BE stock has declined 26% to currently change hands around $21.45 per share. In the last month, the share price has come down nearly 22% as the broader hydrogen energy sector slumped. Investors have been concerned about the passage of President Joe Biden’s infrastructure bill that includes as much as $100 billion for green technology initiatives.
Going forward, Bloom Energy is pushing into Europe with a new collaborative project in the United Kingdom. Analysts seem to agree that expanding overseas is the right move. The median price target on Bloom Energy stock is currently $34.50, which is 60% higher than where shares currently sit.
On the date of publication, Joel Baglole held a long position in C. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.