Hydrogen stocks could have an explosive future. For one, according to analysts at HSBC, “We estimate $8 billion in federal stimulus could be unlocked over the next three years (2024-26) to support the U.S. hydrogen industry.” Two, the global hydrogen market could be worth $410.6 billion by 2030 from $242.7 billion in 2023, according to Research and Markets. Three, as I’ve mentioned before, Goldman Sachs (NYSE:GS) believes the hydrogen market could be worth $1 trillion by 2050. And four, the U.S. Department of Energy just committed $48 million to advance clean hydrogen technologies.
That said, investors may want to consider investing in the following hydrogen stocks, which could get quite explosive as the U.S. goes green.
Hydrogen Stocks: Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) may not have the most attractive chart just yet, but give it time. At the moment, it’s oversold at double bottom support and was just given a Buy rating by analysts at HSBC, with an $11 price target. The firm noted the company could be at an “inflection point,” as noted by Barron’s. That is, “should sales align with 2023 guidance, as the government allocates more dollars to clean energy and an uptick in liquid hydrogen production lifts profitability at the company.” Even analysts at Jefferies just assumed a Buy rating on the PLUG stock.
Better, the company did manage to post record revenues of $260.2 million in the second quarter — up 72% year over year. It even forecasted full-year revenues of $1.2 billion to $1.4 billion — all thanks to partnerships. Unfortunately, while revenue has gained momentum, so have costs and operating expenses. While disappointing, it does appear the negativity has been fully priced into the stock.
Defiance Next Gen H2 ETF (HDRO)
Or, we can look at ETFs. If you’ve been following me for a while, you know that one of my favorite ways to trade booming industries is with an ETF. Not only do they allow you to diversify with top names, but they’re also offered at less cost. Look at the Defiance Next Gen H2 ETF (NYSEARCA:HDRO), for example. With an expense ratio of 0.30%, the ETF tracks the performance of 28 stocks, which generate at least 50% of their revenue from hydrogen-based energy sources.
Some of its top holdings include Plug Power, Bloom Energy (NYSE:BE), Ballard Power (NASDAQ:BLDP), ITM Power (OTCMKTS:ITMPF), and Air Products and Chemicals (NYSE:APD) to name a few. Better, investors can gain exposure to these stocks and more for less than $7 a share.
Air Products & Chemicals (APD)
The last time I mentioned Air Products & Chemicals, it traded around $286 a share after gapping from a high of $305. That was on Aug. 11. At the time, I said, “With the negativity priced into the gap, I’d use weakness as an opportunity. For one, APD is now technically oversold on relative strength, MACD, and Williams’ %R. Two, the last time APD became this technically oversold, it bounced from about $270 to $304.”
By Sept. 18, APD was up to $307.71. Now, back to $286.70, we’re being offered another opportunity to trade it again. Not only are RSI, MACD and Williams’ %R over-extended again, but the stock is sitting at strong support again.
Even better, APD yields 2.44% and recently posted solid earnings. In fact, for its third quarter, the company posted EPS of $2.98, which was 16% year-over-year growth. EBITDA of $1.2 billion was also up 12% year over year. Moving forward, analysts have high expectations for the APD stock thanks to several new projects that should become operational.
In short, when it comes to APD, use the weakness as an opportunity. From its current price, I’d like to see the stock initially retest $307.50 again soon.
On the date of publication, Ian Cooper did not hold (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.
