There are cheap hydrogen stocks in today’s environment that might not stay cheap for long. Due to the explosion of interest in risky equities such as tech stocks, these emerging players all have great value catalysts ahead of them. Furthermore, the economy is also looking strong with low unemployment. Combining these factors, we see a great backdrop for cheap hydrogen stocks to create new all-time highs.
High-interest rates might slow things down. But as we continue to get inflation under control, the Fed will surely take its foot off the gas on rate hikes in the foreseeable future. The implication of falling rates is great for growth stocks, specifically, lower interest rates raise the expected value of its future cash flows. It also makes credit easier to access and obtain, helping to continue the decades-long bull market of the S&P 500.
Those are all great reasons to snap up cheap hydrogen stocks now before one misses out. Let’s investigate which are the recommended plays.
Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) is an American multinational industrial chemicals and gas company that provides critical infrastructure for a variety of industries. As an added bonus, APD stock may also fill a spot in your portfolio if you’d like a company in the industrials sector, too. The benefit is that industrials create a cyclical sector that performs well when the economy hums along.
In 2022, they saw strong revenue growth of 23%, while also growing EPS by 7.53% year-over-year. APD has made significant investments in liquified hydrogen for commercial use, including a $475 million (CAD) investment from Canada’s Federal and Provincial Government to build out a robust Hydrogen network in Alberta, Canada.
In terms of timing, now might be a good time to buy APD stock. Analysts gave it a $329.14 price target, signaling an appreciable upside. Momentum is also on its side. It trades above its 20-day, 50-day, and 200-day moving averages, meaning bulls could stand to benefit for longer.
Bloom Energy (BE)
Bloom Energy (NYSE:BE) specializes in hydrogen fuel cells, electrolyzers, and microgrid energy solutions. Their solid oxide fuel cell technology has been leveraged across a variety of industries. BE stock is my best short-term contrarian play in the hydrogen industry. Analysts expect it to rise to $26.43 in the coming year.
Furthermore, the stock has seen a recent decline, but the upcoming earnings report and the launch of a new product for net zero heating and cooling could influence its future performance. Also, the company expands throughout Europe, particularly by signing a major player in Germany.
Under the agreement, 300 kilowatts of Bloom’s solid oxide fuel cells will provide base load power to Geothermie-Gesellschaft Bruchsal GmbH’s geothermal plant in Bruchsal, which supplies heat and electricity and is part of a research project to extract lithium from geothermal water. This news was announced just days ago and is pivotal to give bulls the enthusiasm they need to reach that healthy price target.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) is a more high-risk, high-reward play. They have secured a hydrogen supply deal with Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT), as well as large-scale hydrogen supply deals in Europe. However, the tradeoff is that PLUG stock burns hundreds of millions of dollars per quarter with no defined path to profitability.
It’s not all bad news, however. PLUG stock has a firmly liquid balance sheet, with very little long-term debt on its books. Its current liabilities due in a year also make up a small part of its capital structure. It has a quick ratio of 3.20 and a current ratio of 4.40. If these ratios were worse, there would be a good reason to be worried.
Looking ahead, it plans a green hydrogen generation plant at the Port of Antwerp-Bruge, Germany. The company also has partnerships in Europe and Asia and plans to produce more than half of its hydrogen energy from renewable sources by 2024.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
