Hydrogen stocks have yet to make a comeback in 2024. The Global X Hydrogen ETF (NASDAQ:HYDR), which has a $43 million AUM and holds 29 different equities related to developing hydrogen energy, has plummeted more than 23.7% on a year-to-date basis. While HYDR has been a good gauge for pure-play hydrogen businesses, not all companies engaged in developing hydrogen, in one way or another, have seen their shares plummet this year. Since the start of 2024, I have been consistent about recommending hydrogen stocks that are not just all pure-play, startup hydrogen businesses.
Investors can find interesting hydrogen plays in larger, established companies in the chemicals as well as the oil & gas sector. In uncertain macroeconomic times, it’s important to not bet heavily on relatively new businesses, as their stocks can be immensely volatile.
Hydrogen energy, once produced at scale, should be a key part of the world’s transition away from fossil fuels. Below are three hydrogen stocks to consider this summer.
Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) is an industrial gas firm that develops and sells a variety of atmospheric gases, including oxygen, nitrogen, helium, carbon dioxide, as well as the equipment to manage the gas-making process. Boasting a more than $58 billion market capitalization and having generated more than $12 billion in revenue in fiscal year 2023, Air Products is a pretty sizable business. Because of its high exposure to industrial companies, the ongoing macroeconomic uncertainty has definitely hurt the company’s overall business. More concretely, revenue growth slightly declined in fiscal year 2023 by 0.8%. In their earnings release, management noted that, despite higher volume, a “six percent reduction in energy cost pass-through and a three percent reduction due to unfavorable currency” led to the overall slight decline in revenue.
Still, Air Products was able to manage operating costs and delivered a 12% year-over-year increase in non-GAAP EPS. APD also declared a $1.75/share dividend, which would represent an 8% increase from the last dividend.
Despite some macroeconomic hiccups, Air Products remains a solid hydrogen investment, especially as it is the one of the world’s largest providers of clean hydrogen.
BP (BP)
BP (NYSE:BP) is one of the world’s key oil and gas giants. Based in the United Kingdom, BP has around the world and engages in the production of natural gas, trading of gas, operation of onshore and offshore wind power, and the development of hydrogen energy and storage. Since the Biden Administration signed into the law the $480 billion Inflation Reduction Act, which poured billions into subsidizing low-carbon and renewable energy businesses, BP has sought to increase its investments in renewable energy resources, particularly hydrogen.
Back in 2022, according to the news agency Reuters, “BP has overhauled its structure to create a dedicated hydrogen division led by Felipe Arbelaez which includes 150 staff. It also made several investments in large hydrogen projects, including in Australia, Europe and Britain.” BP has also earmarked billions for investments in renewable energy startups. In 2023, BP was a key investor in U.S. green hydrogen startup Advanced Ionics’s series A round, as an example.
BP’s cheap valuation multiple – which sits at 7.5x forward earnings – and its increasingly larger role in hydrogen energy creation makes it an interest hydrogen stock bet to make this summer.
Bloom Energy (BE)
Bloom Energy (NYSE:BE) makes the final entry on this list. This pure-play hydrogen firm develops solid-oxide fuel cell systems that are critical for on-site power generation. The Bloom Energy Server is the company’s flagship product, and it uses solid oxide technology to convert fuels, such as natural gas, biogas, hydrogen, through the provision of a “non-combustion pathway” that converts the gases directly to electricity. Bloom Energy sells its hydrogen energy products to utilities companies, data centers, manufacturing facilities, and even retailers, among many more.
While Bloom Energy has definitely seen its finances suffer from an uncertain macroeconomic environment, the pure-play hydrogen firm’s balance sheet remains in good shape. Bloom Energy boasted more than $515 million in cash and short-term investments. Furthermore, a recent capital raise saw the firm raise $350 million in green convertible notes at a 3% annual interest rate. That is all to say, Bloom Energy is likely to weather all of the short-term headwinds in the market.
On the date of publication, Tyrik Torres 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.
