Hydrogen stocks continue to spark investor interest worldwide.
The global push for net-zero emissions is on, and hydrogen is likely to play a huge part in the transition. As the clean by-product of water vapor and warm air, hydrogen remains a cornerstone in advancing sustainable energy.
Moreover, the public and private sectors are ramping up support for environmentally friendly initiatives. Hence, the shift propels robust growth in the hydrogen space, making it an excellent time for investors to consider building positions in hydrogen stocks.
Nevertheless, it’s important to understand the hydrogen space is not a stable industry by any means.
Hydrogen stocks, especially pure-plays, have shed a ton of value over the past couple of years, making it important to be circumspect. Over the long term, though, the best hydrogen stocks, as discussed in the article, are positioned to deliver significant returns, presenting an enticing opportunity.
Hydrogen Stocks to Buy: Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) is effectively shaping the future of energy through its massive investments in advancing hydrogen. Moreover, as a leader in industrial gases, the firm is able to mitigate investment risks while ensuring stability. Additionally, its profitability profile is a peach, consistently posting double-digit margins over the past several years. The cherry on top is its powerful dividend, which has grown for 41 consecutive years while yielding an impressive 2.66%.
Lately, we’ve seen APD invest heavily in hydrogen space. Last month, APD signed a 15-year contract to supply green hydrogen to TotalEnergies’ (NYSE:TTE) European refineries starting in 2030. Moreover, it plans to build an extensive network of hydrogen refueling stations across California, including a massive $4 billion green hydrogen plant in Texas. Hence, if these plans come to fruition, we could potentially see APD stock scale new heights.
Linde (LIN)
Linde (NASDAQ:LIN) is another top hydrogen play, with an already impressive positioning in the niche. It has approximately 200 hydrogen refueling stations and 80 hydrogen electrolysis plants globally, covering the entire hydrogen value chain.
Like APD, Linde is also a diversified industrial giant that produces and supplies oxygen, nitrogen and specialty gases — among others. Consequently, its business has grown rapidly, with its 5-year top-line growth averaging 21%. Also, its profitability profile has been spectacular, maintaining double-digit margins over the past several years.
As we advance, Linde is set to expand its market share further in the hydrogen space. It will be looking to build the largest electrolyzer, potentially doubling its green liquid hydrogen production capacity. Also, it plans to construct a 24MW proton exchange membrane electrolyzer in Europe, powering roughly 600 fuel cell buses. If that wasn’t enough, it has multiple green hydrogen projects underway in Norway and Brazil, enhancing its global footprint.
AES (AES)
AES (NYSE:AES) is a Virginia-based power utility firm with operations in 15 countries, including the Netherlands, the Philippines and Vietnam. Over the years, the company has made bold strides in transitioning towards sustainable energy. Hydrogen is a huge part of that change and is in line with its commitment to reducing carbon emissions.
Despite the challenges during the transition, AES can finally switch on the afterburners. Last year, in particular, was a breakthrough time for the business, generating $249 million in net profits, compared to two grueling years of losses totaling upwards of $950 billion. Additionally, the firm doubled its renewables construction to 3.5 GW while securing a nifty 5.6 GW in new power purchase agreements (PPAs). Hence, last year’s turnaround in fortunes for the company throws light on its effective strategy and long-term potential in the green energy space.
Also, AES stock trades under one-time forward sales estimates while yielding more than 4%.
On the date of publication, Muslim Farooque 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
