Amidst a global green energy revolution, hydrogen stocks are emerging as a dynamic investment opportunity.
Industry giants like Bank of America and Goldman Sachs anticipate hydrogen evolving into an $11 trillion market. The Biden Administration supports it with a significant $7 billion investment in U.S. hydrogen hubs. This surge in interest and funding underscores hydrogen’s pivotal role in the clean energy landscape.
Yet after a robust 2021 rally, hydrogen stocks faced a downturn, marked by cash burn and equity dilution concerns, particularly among new market entrants. This correction phase offers a strategic entry point for investors to engage with promising clean energy stocks. With hydrogen’s demand escalating from 87 million tons in 2020 to an estimated 500 to 680 million tons by 2050, the sector is ripe for growth.
Additionally, selecting the right hydrogen stocks is key. As the industry gains momentum, let’s talk about three top hydrogen stocks to buy, each uniquely poised to benefit from the ongoing energy transition.
Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) distinguishes itself in the clean energy market with its attractive forward P/E ratio of 20.67 and a solid dividend yield of 2.56%.
This stock showcases not only value but also steady income potential. Demonstrating robust financial flexibility, APD sets a positive tone in the industry. It distinctively avoids the need for massive equity dilution for funding major hydrogen projects.
Additionally, APD has earmarked a significant $5 billion to $5.5 billion for capital expenditure by 2024. This is indicative of a strong commitment to expanding its clean energy footprint. The investment plan includes $4.5 billion for creating the world’s largest blue hydrogen production facility in Louisiana, slated to be operational by 2026. The company’s strategic investments highlight its leadership in the sector and potential for future growth.
Furthermore, Air Products and Chemicals is building the world’s largest green hydrogen-based ammonia production facility. This $8.4 billion project not only underscores APD’s commitment to sustainable energy but also signals a transformative shift in the industry.
Linde (LIN)
Multinational chemical giant Linde (NYSE:LIN) is making waves in the market, especially with hydrogen. This vigor is reflected in its recent financials.
It showcases a robust 15% year-over-year (YOY) growth in adjusted EPS to $3.57, alongside a whopping $8.2 billion in Q2 sales. Notably, a substantial $7.8 billion backlog positions Linde as a compelling renewable energy stock for discerning investors.
Transitioning to technology, Linde stands at the forefront of sustainable energy solutions. The company is innovating in hydrogen compression and refueling, coupled with efforts in carbon capture and storage. These initiatives are pivotal in reducing carbon emissions, placing Linde at the helm of the clean energy transition.
Moreover, a significant $1.8 billion commitment to an ammonia plant in Texas, aimed at capturing over 1.7 million metric tons of CO2 annually, highlights this. Additionally, partnerships with ExxonMobil (NYSE:XOM) include carbon dioxide transport and storage. And, alongside pioneering renewable energy projects in Brazil, showcase Linde’s dedication to environmental sustainability.
Bloom Energy (BE)
Bloom Energy (NYSE:BE) stands ready for a rebound with its staggering Q3 2023 performance. Renowned for its hydrogen-based technologies, the company has impressively installed over 65 million fuel cells in more than 700 locations worldwide. This further underscores its commitment and expertise.
Moreover, Bloom Energy’s reported a record revenue of $400.3 million in the third quarter, a sizable 36.9% bump YOY. Also, the company achieved a notable milestone with a positive adjusted EBITDA of $66.4 million. That stands in stark contrast to the $13 million EBITDA loss in the same quarter last year. This financial upswing is complemented by Bloom Energy’s confident outlook, reaffirming a full-year revenue projection of $1.4 to $1.5 billion.
Furthermore, Bloom Energy’s solid oxide fuel cell technology is making inroads across diverse industries. With the rising demand for hydrogen fuel cells, the company’s future looks bright in terms of revenue and cash flow growth. TipRanks analysts amplify this sentiment, suggesting a moderate buy rating with a robust 35% upside potential. And this clearly reflects Bloom Energy’s promising trajectory.
On the date of publication, Muslim Farooque 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.
