3 Blue-Chip Hydrogen Stocks to Buy for Outsized Returns


  • These are the blue-chip hydrogen stocks to buy for outsized returns in the next five years
  • Linde (LIN): Deep expertise in the hydrogen economy with 200 hydrogen refuelling stations and 80 hydrogen electrolysis plants globally
  • Air Products and Chemicals (APD): Already committed to investment $15 billion towards clean energy projects
  • Chevron (CVX): Currently produces approximately 1 million tonnes per year of hydrogen and further expansion on the cards
blue-chip hydrogen stocks to buy - 3 Blue-Chip Hydrogen Stocks to Buy for Outsized Returns

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In the last few years, any discussion on hydrogen stocks was incomplete without Plug Power (NASDAQ:PLUG). The stock has, however, experienced a correction of almost 70% in the last 12 months. In an emerging sector, that risk always exists with small companies. Even with ambitious plans, execution and financing headwinds can play spoilsport.

Having said that, there is no doubt that the hydrogen economy will get bigger in the coming years. This column focuses on the blue-chip hydrogen stocks to buy for robust returns in the long term. Being blue-chip ideas, there is a higher margin of safety for investors.

In terms of industry growth potential, the global hydrogen demand touched 95mt in 2022. It’s expected that by 2030, hydrogen demand will swell to 150mt. Further, by 2050, hydrogen demand is likely to vary between 150 to 500 million metric tonnes per year. Clearly, the growth story is beyond the current decade.

Let’s therefore discuss three blue-chip hydrogen stocks to buy for multibagger returns potential

Linde (LIN)

Logo of Linde AG (LIN) in Hanover, Germany - The Linde Group is a multinational chemical company
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Linde (NASDAQ:LIN) is among the best blue-chip hydrogen stocks to buy. I believe that a forward price-to-earnings ratio of 29.9 is attractive and LIN stock also offers a dividend yield of 1.19%.

It’s worth noting that Linde has the largest liquid hydrogen capacity and distribution system in the world. Further, the company operates close to 200 hydrogen refuelling stations and 80 hydrogen electrolysis plants globally. The company’s business coverage includes production, processing, storage and distribution.

Therefore, Linde has strong presence in the hydrogen sector and is positioned to leverage on its expertise to expand further. Currently, the company is working on approximately $50 billion investment opportunity in the clean energy sector.

From a financial perspective, Linde reported operating cash flow of $9.3 billion in 2023. Robust cash flows provide ample financial flexibility to making big investments. Currently, the company expects a pipeline of 200 decarbonisation projects with a capital investment of $8 billion to $10 billion.

Air Products and Chemicals (APD)

Air Products truck on motorway. APD stock.
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Air Products and Chemicals (NYSE:APD) stock has been depressed in the last 12 months. At a forward P/E ratio of 19.7, APD stock looks attractively valued. Further, the stock offers a dividend yield of 2.92%.

Air Products and Chemicals has committed to invest in some big hydrogen projects. In the next few years, these investments are likely to translate into healthy revenue and cash flow upside.

In December 2022, Air Products and AES Corporation (NYSE:AES) announced an investment of $4 billion to build, own and operate a green hydrogen production facility in Wilbarger County, Texas. The company is also building Europe’s largest blue hydrogen plant that’s expected to be on-stream in 2026.

Further, the NEOM Green Hydrogen company is establishing the world’s largest green-hydrogen-based ammonia production facility run on renewable energy. The project is a equal production joint venture of ACWA Power, Air Products and NEOM.

Overall, Air Products has committed $15 billion towards clean energy projects through 2027. With a strong balance sheet, I expect more investments that will set stage for healthy long-term growth.

Chevron Corporation (CVX)

Chevron logo on blue sign in front of skyscraper building
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Chevron Corporation (NYSE:CVX) is an oil and gas major. The company has an investment grade balance sheet and low break-even oil assets. With energy prices being subdued due to macroeconomic headwinds, CVX stock has remained sideways in the last 12 months. This is an opportunity to accumulate the undervalued stock with Chevron making investments towards the hydrogen economy.

To put things into perspective, Chevron expects to invest $10 billion towards clean energy business through 2028. The investments include areas of hydrogen energy and carbon capture.

An important point to note is that Chevron currently produces approximately 1 million tonnes per year of hydrogen. Further, the company has experience in retail hydrogen since 2005. Chevron also holds 75 patents from early commercial ventures in the hydrogen economy. Clearly, the company is well positioned to expand the hydrogen business in the coming years.

In February, Chevron announced its solar-to-hydrogen production project. The project is expected to begin in 2026 and the plant will be capable of producing 2.2 tonnes per day of hydrogen fuel.

On the date of publication, Faisal Humayun did not hold (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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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