Hydrogen Stock Steals: 3 Underpriced Plays to Capitalize on the Boom

  • Investing in hydrogen stocks while they are still cheap could offer significant returns as the world transitions to clean energy.
  • Linde PLC (LIN): The company’s momentum in industrial gas production and its expanding green hydrogen projects position it well for growth in the Net Zero Emisison goals of 2050.
  • New Fortress Energy (NFE): Its acquisitions, infrastructure projects, and financial results make it an attractive choice for investors looking to benefit from the hydrogen and energy market.
  • BP PLC ADR (BP): BP’s portfolio of energies, such as hydrogen and carbon solutions, alongside its traditional oil and gas business, provides exposure to the energy transition, which could also yield profits in the long run.
hydrogen stocks - Hydrogen Stock Steals: 3 Underpriced Plays to Capitalize on the Boom

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The United Nations is aiming for a Net Zero Emission by 2050, and because of that, hydrogen has become a viable alternative to fossil fuels. Hydrogen holds a huge potential in the future of clean energy, and investing in hydrogen stocks — while they’re still affordable — should be an investor’s natural response. 

Fortunately, many companies are now getting into the business of supporting the growing hydrogen sector — companies that are positioning themselves well to benefit from this market. This also means investors can get in while the rocket hasn’t been launched yet. 

However, like any investment, there are risks. The hydrogen industry is still developing; not all companies will thrive. With that in mind, I’ve compiled three hydrogen stocks with promising financials.

For this analysis, I screened for hydrogen stocks and three filters to come up with a shortlist: 

  • A buy or strong buy rating from analysts,
  • 1-year basic EPS growth of at least 50%, and
  • A trailing twelve-month price-to-earning or P/E ratio of 35x or below.

After that, I arranged the list from highest to lowest P/E, and the top three results are as follows: 

Linde PLC (LIN)

Logo of Linde AG (LIN) in Hanover, Germany - The Linde Group is a multinational chemical company
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Industrial gas companies that perform on a global stage are arguably the best option to invest in for longevity. Linde PLC (NASDAQ:LIN) is a perfect example. The company produces various gasses essential for many industries worldwide, including oxygen, nitrogen, carbon dioxide and hydrogen. 

In addition, Linde Plc designed turnkey process plants for its customers and its own gas businesses, which backs its expertise in industrial gas production. 

Linde’s subsidiary, White Martins, is set to build a second green hydrogen electrolyzer plant in Brazil to supply glass manufacturer Cebrace and other industrial customers. The five-megawatt plant will be powered by renewable energy sources starting in 2025.

Linde ended 2023 with mixed performance. Revenue decreased by 2%. However, net income was $6.2 billion, higher than last year’s $4.1 billion. 

LIN stock also has a ttm P/E of 31.37x, perhaps a bit higher than normal yet within a reasonable range. This is slightly offset by its impressive 53.01% 1-year basic EPS growth. 

Linde’s EPS guidance for FY’24 is $15.25 – $15.65, or 8% to 11% growth. Considering all these factors, the analysts’ Strong Buy rating for the stock is reasonable. 

New Fortress Energy (NFE)

An image of a hexagon structure with the text H2 Hydrogen on a blue background
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If one talks about an integrated gas-to-power infrastructure company, many investors would immediately think of New Fortress Energy (NASDAQ:NFE).

The company’s two main segments are Terminals & Infrastructure and Ships, and operates within these main business segments:

  • Terminals and Infrastructure: This segment focuses on natural gas—including hydrogen—procurement, liquefaction, shipping, and logistics, as well as the development of natural gas-fired power generation
  • Shipping Segment: Offers Floating Storage and Regasification Units and LNG carriers for lease to customers.

New Fortress Energy is on a quest to meet the growing demand for clean energy solutions worldwide with its facilities from Jamaica and Puerto Rico to Mexico.

Speaking of meeting the growing demand, New Fortress Energy has taken steps to address it by finalizing the acquisition of a 1.6 GW Capacity Reserve Contract. The transaction involved the issuance of Series A Convertible Preferred Stock and the assumption of certain liabilities by New Fortress Energy. Furthermore, the company has started constructing a power plant in Brazil, which it projects will yield annual fixed capacity payments of $280 million for 15 years, per the contract terms.

The company’s FY’23 results were also mixed. Revenue grew from $2.37 billion to $2.41 billion, yet this led to basic EPS reaching $2.66 per share, a massive increase from last year’s 93 cents and a 186.02% growth YOY. 

New Fortress currently has a ttm P/E of 9.90x, which is relatively cheap when you compare it to the energy sector’s 11.6x P/E

The growth across metrics contributed to analysts’ strong buy rating for the stock.


BP stock: the BP company logo on a building
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BP PLC (NYSE:BP) is another hydrogen company on our radar that does not only deal with hydrogen but also with other business segments and is a huge global player in the sector. The company produces natural gas, crude oil and renewable energy and also engages in marketing energy products. Aside from that, BP is also investing in low-carbon solutions like hydrogen, carbon capture and storage, winder power, and electric vehicle charging. 

BP PLC recently started oil production from its new $6 billion offshore platform, Azeri Central East, in Azerbaijan—the seventh platform in the Azeri-Chirag-Gunashli field. The company says the new project can handle thousands of barrels per day and expects it to produce 300 million barrels over its lifespan, which could significantly improve Azerbaijan’s declining oil production.

Headlining BP’s year-end report is an excellent $15.2 billion profit, leading to a 1-year EPS growth of 767.09%. The company also has a ttm P/E ratio of 8.10x, the lowest of all the hydrogen stocks on this list. Analysts have a buy rating for BP stock.

On the date of publication, Rick Orford 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.

Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/hydrogen-stock-steals-3-underpriced-plays-to-capitalize-on-the-boom/.

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