There could be substantial opportunities for undervalued hydrogen stocks.
That is, if President Biden loosens the proposed rules on hydrogen tax credits, making them far friendlier to producers, as E&E News notes. In fact, according to Senate Environment and Public Works Chair Tom Carper (D-Del.) and Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.), the current guideline qualification issues should be lowered. “I expect it to be modified,” Manchin added. “It can’t survive the way it is.”
When and if that happens, hydrogen stocks could push aggressively higher again. Here are some of the most undervalued hydrogen stocks to consider.
Linde (LIN)
The last time I mentioned Linde (NYSE:LIN), it traded at around $350 on April 3. Today, still an undervalued hydrogen stock, it’s up to $408.92, with a yield of 1.25%. From here, I’d like to see it closer to $480 if and when President Biden loosens the hydrogen tax credits.
Better, the company continues to grow. Late last year, for example, LIN increased daily production to 30 tons per day at its Alabama facility. Prior to that, Linde announced an investment of about $1.8 billion in a new blue hydrogen plant in Texas.
Helping, analysts at Citi also just raised their price target on the LIN stock to $475 from $450, with a buy rating. Morgan Stanley also raised its price target to 5450 from $420, with an overweight rating. And, at the moment, we’re waiting on its next earnings report due Feb. 6.
In its last report, Linde said it expected its adjusted earnings per share (EPS) to grow 14% to 15% in 2023, up from a previous guidance of 12% to 14%. It also announced a $15 billion share buyback at the time and a fourth-quarter dividend of $1.275 per share.
New Fortress Energy (NFE)
There’s also New Fortress Energy (NASDAQ:NFE), which recently ran from a low of about $28 to a high of about $40. Now consolidating around $36, I’d like to see NFE challenge its prior high initially.
With a goal of transforming “NFE into one of the world’s leading providers of carbon-free power by replacing fossil fuels with affordable zero net-carbon hydrogen,” as noted on its site, it’s one of the most explosive hydrogen stocks on the market.
Helping, recent earnings haven’t been too shabby. It recently posted EPS of $0.30, which was in line with estimates. It also posted revenue of $514.46 million, which beat by $14.9 million. Plus, analysts at Stifel recently raised their price target to $46 from $40, with a buy rating.
Direxion Hydrogen ETF (HJEN)
Or, if you want to diversify at a low cost, there’s 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. While its chart isn’t anything to write home about at the moment, give it time. Remember, should President Biden ease current hydrogen tax credit rules, related stocks could take off again.
Some of its top holdings include Air Liquide (OTCMKTS:AIQUY), Shell PLC (NYSE:SHEL), Bloom Energy (NYSE:BE), Plug Power (NASDAQ:PLUG), BP (NYSE:BP) and Air Products and Chemicals (NYSE:APD).
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.
