The hydrogen economy continues to emerge, making hydrogen stocks highly attractive to investors. Hydrogen is expected to work in tandem with renewable electricity to decarbonize hard-to-reach sectors.
Hydrogen energy is an alternative to fossil fuels and has the potential to power the world in a cleaner manner. According to a McKinsey analysis, hydrogen could contribute to more than 20% of global emissions reductions by the year 2050.
There were more than 1,000 large-scale hydrogen projects announced by May of 2023. If we move to a net zero future, those projects will be indispensable. Let’s look at three cheap stocks representing investment in that broader future goal.
Cheap Hydrogen Stocks: Bloom Energy (BE)
Bloom Energy (NYSE:BE) manufactures and installs solid oxide fuel-cell-based power platforms for its customers. The stock is one of the more established pure-play offerings in the hydrogen sector. There are bigger, safer investments in Diversified industrial gas producers, but those simply don’t offer the same immediate upside as Bloom Energy does.
That said, Bloom Energy is facing some difficulties and remains a volatile stock overall and one that is subject to potential downturns. Bank of America Securities analyst Julien Dumoulin-Smith recently downgraded his outlook on Bloom Energy. Dumoulin-Smith’s price target for BE stock is $10. That’s not far from its current price of $11. Further, BE stock carries an average target price approaching $20. The stock is well covered in terms of the number of analysts with targets, which suggests there is real return potential at the moment.
Bloom Energy did report record revenues in the third quarter, so there is reason for optimism at this time.
Ballard Power Systems (BLDP)
Ballard Power Systems (NASDAQ:BLDP) manufactures fuel cell platforms for mostly heavy-duty applications. Applications range from power products to materials handling to backup power systems. Ballard Power Systems is one of the more interesting hydrogen stocks from a purely fundamental perspective.
In the third quarter, revenues increased by 29%, reaching $27.6 million. Of that $27.6 million in revenue, $21.1 million was attributable to heavy-duty mobility. Heavy-duty mobility comprises marine, rail, bus, and truck vertical applications. Revenues from heavy-duty mobility increased by 67% during the period.
The U.S. Department of Energy announced that it will release $7 billion of funding to develop regional clean energy hubs. Ballard Power Systems is connected to six of those seven hubs in some form or another. That suggests that the company has real growth potential and is well aligned with public policy that will fund much of NetZero’s targets.
Share prices are expected to rise to $5 per consensus opinion. That wouldn’t quite represent 100% returns, given that Ballard Power Systems shares trade for just over $3. However, target prices also range to a $15 high, indicating potential returns well above 100%.
FuelCell Energy (FCEL)
FuelCell Energy (NASDAQ:FCEL) manufactures stationary fuel cell platforms and is a somewhat stagnant firm, yet it also has the potential to provide 100% returns. That simple truth is borne out by The ratings that suggest its stock could rise to $2.50. Shares currently trade for $1.25.
Yet none of the FuelCell Energy analysts rate it a ‘buy.’ The company is stagnant at the moment from a revenue perspective. Sales declined by 5% in 2023, falling to $123.4 million. The company’s sales decline was more pronounced in the fourth quarter when revenues fell from $39.2 million to $22.5 million.
However, FuelCell Energy’s losses continue to narrow both on an annual level and every quarter. The company has over $403 million in cash and reported a net loss of $108.1 million in 2023 overall. It also has a backlog of orders valued at over $1 billion. Without any further funding, it can continue to pursue the fulfillment of that backlog, likely for four years or more. That makes it an interesting investment overall.
On the date of publication, Alex Sirois 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.
