Hydrogen stocks are on the rise in recent years, thanks to growing demand for hydrogen fuel cells and eletrolyzers. As governments around the world seek net zero emissions by 2050, it will take more than your traditional solar, wind and nuclear power to reach these ambitious goals. The global hydrogen market is picking up steam. According to GrandViewResearch it is projected to grow at a CAGR of 9.3% from 2023 to 2030. This has investors looking for the best hydrogen stocks to buy.
However, there are still major hurdles that the industry needs to overcome. This includes hydrogen’s high costs to produce energy, as well as the infrastructure needed to build out expensive hydrogen networks. These hurdles were partially answered with President Biden’s Infrastructure and Jobs Act which included a robust hydrogen strategy and roadmap. The roadmap encompasses a $62 billion investment for the United States Department of Energy, with $9.5 billion dedicated for clean hydrogen. This planned investment is projected to create more than 100,000 jobs through 2030. While the nature of hydrogen is a lot more complex than its clean energy counterparts, the path forward is expected to spur growth and investment for years to come. Below are three hydrogen stocks to buy now before the industry takes off.
Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) is an American multinational industrial chemicals and gas company. They provide critical infrastructure for a variety of industries including chemicals, refining, metals, electronics, food & beverage and manufacturing. In 2022, they saw strong revenue growth of 23%, while also growing EPS by 7.53% year-over-year. Demand for industrial gasses has remained strong, which helped curtail supply chain constraints that persisted throughout 2022.
Industry growth tailwinds for the hydrogen market are picking up, with significant investments in liquified hydrogen for commercial use. In November 2022, APD announced a significant investment of $475 million from Canada’s Federal and Provincial Government. The funding would help build out a robust Hydrogen network in Alberta, Canada for large scale hydrogen facilities. The following month, they announced a partnership with AES Corporation (NYSE:AES) to invest approximately $4 billion USD in a new hydrogen production facility. This facility will be capable of producing 200 metric tons per day of green hydrogen, making it the largest hydrogen production facility in the United States. With a proven track record of producing and supplying large scale industrial gasses, Air Products and Chemicals is one of the best hydrogen stocks to buy for 2023.
Bloom Energy (BE)
Bloom Energy (NYSE:BE) has made a name for itself in the hydrogen space over the last decade. The company specializes in hydrogen fuel cells, electrolyzers and microgrid energy solutions. BE’s solid oxide fuel cell technology has been leveraged across a variety of industries from healthcare, retail, data centers, utilities and manufacturing. While their microgrid solutions deliver clean, reliable, and sustainable energy to their customers.
Analysts project Bloom to grow its revenue by more than 20% year-over-year in 2023. This is partially driven by increasing demand for their microgrid energy solutions. Bloom Energy’s microgrid can provide businesses with increased cost savings and energy independence due to its reliability. This makes it one of the best hydrogen stocks to buy as federal funding ramps up for the hydrogen sector over the next decade.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) is one of the best undervalued hydrogen stocks for more risk tolerant investors. From January of 2020 to January 2021, the stock rose more than more than 20X on the back of fiscal stimulus. The pandemic lockdown created rampant speculation in small cap clean energy companies like PLUG, resulting in increased retail investor demand. Since then the stock has cooled back down. Today it is trading for around 4x more than it was at the start of the 2020 rally. Don’t be mistaken though, Plug Power has shown it still has a lot of potential.
They have secured a hydrogen supply deal with Amazon (NASDAQ:AMZN). PLUG also made a deal with Walmart (NYSE:WMT), as well as large scale hydrogen supply deals in Europe. Even with these deals in place Plug continues to burn hundreds of millions of dollars per quarter with no defined path to profitability. Investors cannot overlook the nature of the hydrogen business being both extremely capital intensive and unprofitable. Also, it is important to note that any federal funding gaps that are not met under the production tax credits rules for hydrogen, will place limitations on the company’s future success. Make no mistake, this is a high-risk, high-reward play, only invest what you can afford to potentially lose.
On the date of publication, Terel Miles 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.
