Hydrogen stocks are hot and demand is only expected to increase. As noted by The Wall Street Journal a recent McKinsey report predicts 5x rise in hydrogen demand by 2050 if climate change limited to 1.5°C. To help, the Biden Administration just announced $7 billion in subsidies dedicated to hydrogen projects all over the U.S.
The International Energy Agency acknowledged the growing momentum behind low-emissions hydrogen despite financial incentives and cost pressures. Production levels can substantially increase by 2030 if all announced projects are realized and greater efforts are made to encourage uptake.
Air Products and Chemicals (APD)
The last time I mentioned Air Products and Chemicals (NYSE:APD), it traded around $275 on Oct. 24. Just days later, it’s up to $282.44, and is still a top hydrogen pick.
For one, APD found strong double-bottom support dating back to June. It also became ridiculously over-extended on relative strength, MACD, and Williams’ %R, which I also liked on Oct. 24.
From its current price of $282.44, I’d like to see it initially retest $292.50, and eventually $305 again by early 2024. Bank of America seems to like it here, too, raising its price target to $328 from $320. Better, as we wait for APD to recover even more lost ground, we can collect its yield of 2.48% at the moment.
Direxion Hydrogen ETF (HJEN)
Or, if you want to safely diversity with top hydrogen stocks, consider the Direxion Hydrogen ETF(NYSEARCA:HJEN).
With an expense ratio of 0.45%, the ETF invests in companies that benefit from hydrogen production and generation, fuel cells and batteries, and storage and supply.
Its chart is ugly at the moment, having fallen from about $14.50 to $10.96. But don’t write it off. With patience, and a good deal of hydrogen demand, I’d like to see the ETF initially retest $13.25.
Plug Power (PLUG)
Plug Power doesn’t have an attractive chart either. But don’t write this one off either. Involved with electrolyzers and hydrogen fuel cells, it’s well positioned to take advantage of the hydrogen transportation market.
The company expects to grow its top line by a compound annual growth rate of 50% between now and 2030.
It’s projecting $6 billion in revenues by 2027 with gross margins of 32%, and about $20 billion by 2030, with gross margins of 35%, as noted in PLUG’s investor presentation.
To achieve those numbers, the company wants to become a “one-stop shop for the hydrogen economy,” says Barron’s. “It also plans to make heavy-duty trucks that will use hydrogen instead of diesel and it will supply hydrogen gas to other businesses that have equipment that runs on hydrogen.”
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.
