The hydrogen story has come under pressure, but don’t write the industry off just yet. Instead, consider picking up some of the top hydrogen stocks with massive catalysts. In fact, according to the Hydrogen Council, it’s central to reaching net zero emissions and limiting global warming to 1.5 degrees Celsius. Also, according to the U.S. Department of Energy’s 2023 report – The National Clean Hydrogen Strategy and Roadmap – demand for clean hydrogen will increase by 10 million metric tonnes ( ) by the decade’s end. By 2050, it’s expected to increase to a massive 50 MMT.
Better, Goldman Sachs says hydrogen could become a $12 trillion market by 2030. Even Bank of America and Morgan Stanley say we’re looking at an $11 trillion game-changer. And according to the International Energy Agency (), “To reach net zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around $4 trillion.”
In short, when it comes to hydrogen, we’re looking at massive potential. That being said, here are seven ways to trade the future hydrogen boom.
Plug Power (PLUG)
Like many of its peers, Plug Power (NASDAQ:PLUG) was beaten up for most of 2022 and early 2023. However, it is starting to show signs of life after announcing plans for the biggest hydrogen fuel installation in the U.S. with Energy Vault Holdings (NYSE:NRGV). Reportedly, the two will provide hydrogen fuel cells to replace the generators in Calistoga, California.
The company is also developing three green hydrogen production plants in Finland. This should result in the production of 850 tons per day of green hydrogen and could be one of the largest investments in the European market. Even better, investors are anticipating substantial news at Plug’s Investor Day today. According to a new press release, the event will showcase Plug’s Gigafactory in Rochester, New York. Plus, the company is expected to discuss revenue growth opportunities.
And with regard to earnings, first-quarter revenue was 49% higher year over year (), running from $140.8 million to $210.3 million. Unfortunately, it wasn’t enough to produce a profit, with net losses growing from $156.5 million to $206.6 million. Still, even with disappointing financials, Plug deserves its place on your hydrogen stock buy list for the long term.
Air Products & Chemicals (APD)
Air Products & Chemicals (NYSE:APD) is another one of the top hydrogen stocks to buy. With more than 100 hydrogen plants around the world, APD is one of the biggest hydrogen stocks around. Better, with the U.S. Inflation Reduction Act heavily tilted toward hydrogen, according to CEO Seifi Ghasemi, that’s another strong catalyst.
In addition, Air Products & Chemicals announced a quarterly dividend of $1.75, which is payable Aug. 14 to shareholders of record, as of July 3. Earnings growth has been just as impressive. In fact, in its first quarter, the company saw revenue of $3.2 billion, up from $2.9 billion. With strong growth ahead and a solid dividend in place, APD is one of the top hydrogen stocks to buy and hold for the long term.
Analysts at TD Cowen are just as bullish on the stock. In fact, as noted by TD Cowen, as noted by Barron’s, APD is pursuing large-scale projects in North America and the Middle East. “We believe these hydrogen projects can be competitive, positioning APD to be a leader in the space as production costs continue to decline.”
Bloom Energy (BE)
Next up is Bloom Energy (NYSE:BE), a clean-energy company working on electric power generation and storage with solid oxide fuel cells, which generate one waste product, hydrogen. Granted, Bloom Energy has had a rough year. However, much like Plug Power, it’s starting to show some signs of life, too. Also, while the company did post a recent loss of $74.9 million, revenues were 37% higher year over year at $275.2 million. Margins also jumped to 19.7% from 13.9%.
Plus, JPMorgan analyst Mark Strouse likes the stock on the pullback. He believes the drop is overdone and that BE will be a long-term beneficiary of the global energy transition. The analyst currently has an “overweight” rating on the stock, with a price target of $20 a share.
Ballard Power Systems (BLDP)
Ballard Power’s (NASDAQ:BLDP) “zero-emission proton exchange membrane (PEM) delivers fuel cell power for buses, trucks, trains, and marine vessels,” as I noted in March. While earnings and their forecast are nothing to write home about, give it time. BLDP will be a big part of the hydrogen growth story. Right now, yes, it’s a high-risk idea, but by looking at its chart, a good deal of negativity is already priced in.
Even better, the stock is also on the move on positive announcements regarding its production plans, and newer hydrogen technology. For one, Ballard created a thinner bipolar plate for its hydrogen fuel cells. Reportedly, bipolar plates can be extremely expensive when producing hydrogen. By replacing them, costs are likely to come down considerably. After all, when it comes to clean energy, overall cost matters. InvestorPlace contributor Chris MacDonald took a deeper look at the benefits earlier this week.
Another hot trade on the hydrogen boom is Linde (NYSE:LIN). Its Niagara Falls plant is set to open in 2025, and will reportedly use carbon-free hydroelectric power. Also, according to Barron’s, “Hydrogen now represents less than 10% of Linde’s sales, but analysts see it growing in importance as the company invests in projects worth tens of billions of dollars.”
Analysts at Berenberg also raised its price target to $415 from $375, with a “buy” rating. HSBC also raised its price target on LIN to $416 from $380, with a “buy” rating thanks to a strong quarter.
Even better, earnings have been impressive. In its most recent quarter, the company saw a 16% improvement in operating profits to $2 billion. While sales were flat at $8.2 billion, EPS came in at $3.42. All of which were above expectations. Better, the company raised the top end of its guidance and expects EPS to come in at the $3.40 to $3.50 range.
Direxion Hydrogen ETF (HJEN)
The Direxion Hydrogen ETF (NYSEARCA:HJEN) offers us strong diversification among top hydrogen stocks at a lower cost. For example, if I wanted to buy 100 shares of the HJEN ETF, it would cost me about $1,400, which would give me exposure to top names such as Plug Power, Bloom Energy, Ballard Power, Air Products and Chemicals, and another 26 related names. Meanwhile, if I were to buy 100 shares of let’s say Air Products & Chemicals, it would cost me just under $28,500. Granted, the HJEN chart is nothing to write home about just yet. But given time and patience, it could eventually retest resistance at $16.75.
We also have to remember that diversification is the key to success. Rather than putting all of your eggs in one basket, it’s always a good idea to diversify, which the HJEN ETF allows us to do.
Global X Hydrogen ETF (HYDR)
The Global X Hydrogen ETF (NASDAQ:HYDR) hit every branch of the ugly tree on the way down. However, don’t write this idea off, either. Much like the HJEN ETF, this one allows us to diversify among top hydrogen names, too. Here, if we wanted to buy 100 shares, it would cost us about $1,000. Meanwhile, if I wanted to buy 100 shares of just Plug Power, it would cost about $1,100, and we wouldn’t be afforded the diversification of the ETF.
Remember, once the hydrogen story gets red-hot again, so will related ETFs, like HYDR. The fund tracks companies involved in every aspect of the hydrogen story: production, integration, and fuel cell development to name a few.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.