Hydrogen will be an essential component of the clean energy movement of the 2020s. Yet, the market seems to be ignoring the upside potential of Plug Power (NASDAQ:PLUG) stock. Plug Power is addressing a hydrogen market that’s poised for strong growth. There are risks involved, though, so don’t wager more than $100 on Plug Power.
There aren’t many pure plays in fuel cell and clean hydrogen power on the Nasdaq exchange. Plug Power is among a handful of businesses worth considering in this space. Because the Inflation Reduction Act (IRA) allocates large amounts of funding toward green energy, investors shouldn’t ignore niche-market leaders like Plug Power.
Even if you’re not prepared to take a large position in Plug Power stock, that’s fine. A $100 stake isn’t unreasonable. As the hydrogen economy accelerates over the coming years, you can benefit if you invest early in Plug Power.
Hydrogen Market’s Growth Will Boost PLUG Stock
PLUG stock doesn’t deserve to be under $10, especially considering how fast and far the hydrogen industry is expected to expand. As Luke Lango pointed out, Morgan Stanley (NYSE:MS) estimates that the hydrogen economy will create an $11 trillion market.
Hydrogen could become a go-to energy source due to its “unmatched energy density.” In addition, hydrogen is value-added as it “outplays battery electricity when it comes to range, recharging times, and emissions.”
Amid this favorable backdrop, Plug Power expects to be able to address multiple upward-trending markets. In particular, Plug Power sees a $300 billion target addressable market (TAM) in electric vehicles (EVs). Furthermore, the company envisions a $265 billion U.S. TAM in stationary power, a $30 TAM in material handling and a $10 trillion TAM in the hydrogen economy.
Plug Power Has High Sales and Margin Targets
With the IRA providing a tailwind, Plug Power can reasonably expect to expand its sales and margins over the coming years. As the hydrogen economy accelerates, Plug Power will undoubtedly have opportunities to increase its sales and firm up its bottom line.
Plug Power’s gigafactory, where the company produces green hydrogen on a massive scale, will be a central part of the company’s growth story. Located in Rochester, New York, the gigafactory features over 2 gigawatts of electrolyzers, 60,000 fuel cell stacks and 2.5 gigawatts of output capacity.
Plug Power’s gigafactory sets the company apart from the competition and should contribute to improvements in Plug Power’s revenue and margins. Ambitiously but not unrealistically, Plug Power is targeting annual sales of $5 billion and 30% gross margin for 2026. Looking out further in time, Plug Power projects annual sales of $20 billion and 35% gross margin for 2030.
Give Plug Power Stock a Try With a $100 Stake
Prospective investors should understand that it’s somewhat risky to own Plug Power stock. Even with the help of the IRA, Plug Power will have some good quarters and some rough ones. After all, it’s normal for emerging industries like clean hydrogen to experience growing pains.
Plug Power’s participation and leadership in the hydrogen economy could provide excellent returns through 2030. In order to mitigate the risks surrounding Plug Power, you can simply maintain a moderate position size. So, I encourage you to invest only $100 in PLUG stock. It’s a reasonable bet on a known leader in the fast-expanding global hydrogen industry.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.