While there is big potential for growth in the hydrogen economy, there is a need for deep pockets. Plug Power (NASDAQ:PLUG) was among the hottest hydrogen stocks. However, the company has struggled from a financing and execution perspective, and the stock has plunged. Therefore, I would look at blue-chip hydrogen stocks with high financial flexibility and expertise in the sector. This column discusses three names investors can buy and hold for long-term value creation.
Regarding the industry potential, it’s estimated that by 2050, the global demand for green hydrogen will vary from 150 to 500 million metric tonnes per year.
Currently, “almost all hydrogen produced worldwide is grey,” which means it is produced from natural gas.” In the coming years, investment in blue and green hydrogen projects will accelerate. The current pipeline already includes 1,400 announced projects that can supply 45 million tons per annum of clean hydrogen through 2030.
With this potential, let’s discuss three blue-chip hydrogen stocks to buy for massive wealth creation.
Linde (LIN)
Linde (NASDAQ:LIN) is among the top blue-chip hydrogen stocks to buy. The industrial gas company looks attractive for fresh exposure at current levels and offers a dividend yield of 1.23%. It’s worth noting that Linde already has deep expertise in the hydrogen sector. Further, the company is well positioned financially to make aggressive investments towards building the green hydrogen economy.
To elaborate, Linde operates the world’s first high-purity hydrogen storage cavern. The company also has a pipeline network of approximately 1,000 kilometres. Globally, Linde has 200 hydrogen refueling stations and 80 hydrogen electrolysis plants.
It’s worth noting that Linde has blue and green hydrogen projects in the pipeline. These include an increase in hydrogen production in the United States coupled with green hydrogen production facilities in Norway and Brazil.
All things considered, the industrial gas company sees clean energy opportunities worth $50 billion for investing globally. A significant part of the investment will likely be directed towards hydrogen. The potential investments will provide ample scope for growth and value creation.
Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) is another industrial gas company with an attractive forward P/E of 21.3 times. APD stock also provides a robust dividend yield of 2.71%.
It’s worth noting that Air Products has a strong balance sheet and high financial flexibility, which allows the company to make aggressive investments. The industrial gas company has committed to spending $15 billion on projects that will advance low-carbon hydrogen production, which is likely to translate into growth in the next few years.
Among the major projects, the NEOM in Saudi Arabia is an equal production joint venture of ACWA Power, Air Products, and NEOM. It’s likely to be the world’s largest green-hydrogen-based ammonia production facility.
Air Products will also build, own, and operate a 35-metric-ton-per-day facility to produce green liquid hydrogen in Massena, New York. Further, the Louisiana project is to produce over 750 million standard cubic feet per day of blue hydrogen.
Chevron (CVX)
Chevron (NYSE:CVX) is far from being a pure-play in the clean energy business. However, the oil & gas major has robust financial flexibility and is making some big investments in the decarbonization theme. Overall, Chevron has plans to invest $10 billion in clean energy projects through 2028.
Oil has remained subdued due to macroeconomic headwinds, and CVX has remained sideways in the last 12 months. I see this as a good accumulation opportunity, as the stock also offers a robust dividend yield of 4.13%.
In February, Chevron announced that its facilities in California would produce hydrogen. The facility will be operational in 2026 and will have a capacity of 2.2 tons per day, which can fuel a vehicle for 132,000 miles.
It’s worth noting that in September 2023, the exploration company acquired a majority stake in the world’s largest proposed storage facility for hydrogen. This is unsurprising, as Chevron produces one million tons of hydrogen annually. The acquisition is a likely step towards further expansion of hydrogen production.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
