Hydrogen stocks are soaring as it increasingly looks like the Georgia Senate runoff elections will result in victories for both Democratic candidates. That means the Senate will be tied in terms of number of Republicans and Democrats. The tie-breaker goes to Vice President-elect Kamala Harris. In effect, then, it appears Democrats have seized control of the White House, the House of Representatives and the Senate.
That’s a big deal for hydrogen stocks.
One of the top priorities — if not the biggest priority — of the Joe Biden campaign was combatting climate change. One of Biden’s biggest challenges in doing so was going to be a Republican-controlled Senate. With that challenge gone, Biden and company have visibility to passing an enormous clean energy bill that will likely materially increase subsidies and funding for all renewable energies.
Hydrogen is one of the largest renewable energy sources in the world, alongside solar and wind.
This major political tailwind will couple with economic tailwinds (hydrogen costs are steadily falling) and technology tailwinds (the emergence of “green hydrogen” has enabled a new era of zero-emission hydrogen production) to spark a boom in the Hydrogen Economy in the 2020s.
The time to invest in hydrogen stocks to play this boom is right now.
With that in mind, let’s take a look at my three favorite hydrogen stocks to buy on the heels of the Georgia Senate runoff elections:
Hydrogen Stocks to Buy: Plug Power (PLUG)
The single best hydrogen stock to buy for play the Hydrogen Economy boom is Plug Power, a $14 billion company that has rapidly emerged as the unrivaled leader of the burgeoning Hydrogen Economy.
The company started out by selling hydrogen fuel cells to companies like Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN) for use in their forklifts. Those fuel cells were broadly seen as a cost- and performance-efficient way for major warehouse operators to cut carbon emissions and improve productivity (since Plug Power’s fuel cells boast 99% uptime with constant power performance).
It was a solid business. But with limited demand. Mostly because big companies were perfectly happy using their old yet cheap forklifts.
Until recently.
Until geopolitical pressure on these companies to cut carbon emissions has dramatically increased, at the same time that the performance needs of fulfillment centers has dramatically increased, too, because of significantly elevated e-commerce demand (with everyone shopping online now, companies like Walmart and Amazon need their forklifts to have 99% uptime with constant power performance to avoid backlogs and delays).
Thus, in recent quarters, demand for Plug Power’s forklift-focused hydrogen fuel cells has increased significantly. Revenue growth rates have surged into the 100%-plus range, and the company has expanded existing partnerships with companies like Walmart to be more deeply integrated in its e-commerce network. This growth acceleration will only, well, accelerate in 2021/22 with a the passing of a huge clean energy bill.
More than that, though, Plug Power is launching new hydrogen fuel cells for use in the automotive and stationary end-markets, and has acquired multiple companies to expand into green hydrogen production.
Net net, Plug Power is leveraging its leadership position in the most mature vertical of the Hydrogen Economy to establish early leadership across all verticals of the Hydrogen Economy.
Naturally, that puts PLUG stock is a position of strength as the Hydrogen Economy kicks into hypergrowth mode.
Bloom Energy (BE)
Bloom Energy is one of my favorite hydrogen stocks to buy for the long haul because this company sits at the overlap of the Hydrogen Economy and the Distributed Energy Revolution.
Bloom Energy is a $4.7 billion fuel-cell maker aimed at making “always on” fuel cells to provide cost-effective, reliable power to commercial entities. The idea is to enable homeowners and businesses to go “off grid” and generate their own power, because the grid is proving increasingly expensive and intermittent.
Although the company counts 24 Fortune 100 companies as its customers, and has installed fuel cells at the corporate campuses of Apple (NASDAQ:AAPL), Home Depot (NYSE:HD), AT&T (NYSE:T), Walmart (NYSE:WMT) and Intel (NASDAQ:INTC), Bloom Energy has yet to make it big because its servers have proven to be too expensive and too dirty to be a scalable off-grid solution.
That’s all changing right now.
The “too expensive” headwind is fading. Thanks to technological advancements and increased scale, Bloom Energy has managed to reduce Server energy costs by 18% per year over the past decade, including an 18% reduction in 2019. At this rate, Bloom Servers should operate below grid prices of 10 cents per kilowatt-hour by 2022/23 – at which point corporate customers will start to look more seriously at mass deploying Bloom Servers because they will meaningfully boost the bottom-line.
Meanwhile, the “too dirty” headwind is also fading. In 2019, the company announced that it would create a new class of servers which would run on hydrogen, not natural gas. In 2020, Bloom then announced it would launch a line of electrolyzers to convert excess solar and wind energy into hydrogen power.
Bloom plans to launch these new hydrogen products for the first time in 2021 in South Korea. If they reliably function as well as the natural gas servers – and they should – then Bloom Energy is optimally positioned with a new, truly clean energy portfolio of products that will become a very important piece of zero-emission corporate distributed energy systems across the globe.
Big picture: Bloom’s growth narrative is on the cusp of a major turning point, at the same time that the Hydrogen Economy is ready to come into its own.
That’s a winning pairing which should power continued big gains in BE stock.
Hydrogen Stocks: Ballard Power (BLDP)
Last, but not least, on my list of hydrogen stocks to buy following the Georgia Senate runoffs is Ballard Power.
While Plug Power is pioneering the hydrogen future in the materials handling industry, Ballard Power is pioneering the hydrogen future in the cargo and local transit markets, making best-in-breed fuel cells of use in buses, trucks, and trains.
The $6.5 billion Canadian fuel cell maker has been in the hydrogen game for over 30 years. Through those three decades, Ballard has turned into the largest player in the still somewhat niche hydrogen cargo and local transit markets. As of today, Ballard’s fuel cells power over 1,000 transit buses and over 2,200 delivery trucks globally.
Importantly, Ballard Power has all the right ingredients to sustain this early leadership as the hydrogen cargo and local transit markets kick into hypergrowth mode over the next decade behind enormous political and economic tailwinds.
The company has the right team, led by 400 engineers, scientists and technologists working tirelessly at advancing Ballard’s hydrogen technology. They have the right products, which includes a portfolio of advanced, differentiated fuel cells specifically designed for use in different commercial transit end-markets. And they have the right focus, strategically gearing its resources and products towards the most rapidly growing economies in the world, like China (where Ballard has a big joint venture, and commands 45% fuel-cell electric vehicle market share) and Europe (where Ballard has a big presence, and commands 80% fuel-cell electric bus market share).
Between its deep team, strong products, and strategic geographic focus, Ballard Power is optimally positioned to turn into the leader of the cargo and local transit verticals of the Hydrogen Economy.
If so, then BLDP stock projects a major winner over the next few years.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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