Now may be the time to buy the best hydrogen stocks, as more of the world’s attention turns toward the industry.
In fact, right now, “(Hydrogen) is enjoying unprecedented momentum around the world and could finally be set on a path to fulfill its longstanding potential as a clean energy solution,” wrote Fatih Birol, executive director for the IEA, as noted by Kiplinger.
In Europe, the European Commission wants to increase hydrogen consumption by 2050. China want to become carbon neutral by 2060, and could become a “hydrogen powerhouse,” as noted by NS Energy contributor Andrew Fawthrop. In the U.S., the Clean Hydrogen Future Coalition, “clean hydrogen has the ability to accelerate decarbonization across all sectors of our economy,” as I noted July 15, 2021.
Even better, the global green hydrogen market could be worth $89.2 billion by 2030 from $1.83 billion in 2021, according to Precedence Research.
With that mind, here are seven trade ideas for the best hydrogen stocks.
|HDRO||Defiance Next Gen H2 ETF||$10.61|
|HYDR||Global X Hydrogen ETF||$11.87|
|HJEN||Direxion Hydrogen ETF||$14.04|
Defiance Next Gen H2 ETF (HDRO)
Expense Ratio: 0.3%, or $30 per $10,000 invested
One of my favorite ways to diversify at a lower cost is with an exchange-traded fund, or ETF. They offer a good deal of exposure to industry giants, letting you play an entire sector without the risk of having to pick individual winners.
Look at the Defiance Next Gen H2 ETF (NYSEARCA:HDRO), for example.
The HDRO ETF, which has an expense ratio of 0.3% or $30 per $10,000 invested, trades just under $11 a share. It also provides exposure to a wide swath of hydrogen stocks, such as Plug Power (NASDAQ:PLUG), ITM Power (OTCMKTS:ITMPF), Ballard Power Systems (NASDAQ:BLDP), and Bloom Energy (NYSE:BE) to name a few.
If I were to buy 100 shares of the HDRO ETF, it’d cost me around $1,100. If I were to buy 100 shares of just Plug Power, it would cost me over $1,500. For less money, I get far better diversification among dozens of stocks.
To be included in this ETF, a company must generate 50% of their revenue from hydrogen and/or technology related to hydrogen, according to Defiance ETFs.
From a current price of $10.61, I’d like to see HDRO run back to $17 long-term.
Global X Hydrogen ETF (HYDR)
Expense Ratio: 0.5%
Another hydrogen ETF to consider is the Global X Hydrogen ETF (NASDAQ:HYDR).
With an expense ratio of 0.5%, the HYDR ETF invests in companies involved in hydrogen production, and development and uses of hydrogen power sources. Some of its top holdings include Bloom Energy, Plug Power, FuelCell Energy (NASDAQ:FCEL), Ceres Power Holdings(OTCMKTS:CRPHY), and Cummins Inc. (NYSE:CMI) to name a few.
While its chart isn’t anything to write home about just yet, don’t write it off.
Once the broader market pullback cools off, and the hydrogen story heats up, I’d like to see the HYDR ETF run from its current price of $11.84 back to $20, long-term.
Direxion Hydrogen ETF (HJEN)
Expense Ratio: 0.45%
Or, take a look at the Direxion Hydrogen ETF (NYSE:HJEN), which offers exposure to 30 companies involved in hydrogen production and generation, storage and supply, fuel cells and batteries, systems and solutions, and those that design and produce membrane filters.
With an expense ratio of 0.45%, some of its top holdings include Bloom Energy Corp., Plug Power, Ballard Power, FuelCell Energy, ITM Power, and Ceres Power Holdings. It pays out a 12-month yield of 1.4% as well.
The ETF is also oversold at triple bottom support around $14. From here, I’d like to see the HJEN ETF again challenge resistance around $17 a share, near-term.
Bloom Energy (BE)
Bloom Energy converts fuels such as hydrogen into clean energy without combustion. Just recently, it announced a deal with LSB Industries (NYSE:LXU) to install a 10-megawatt solid oxide electrolyzer at LSB’s Oklahoma facility. “The project is expected to generate green hydrogen that will contribute to the synthesis of approximately 13,000 metric tons of zero-carbon ammonia per year,” according to a company press release.
Bloom Energy is also working with Ferrari (NYSE:RACE) to achieve carbon neutrality by 2030.
Better, Bloom Energy’s earnings have been solid. Revenue jumped to $201 million from $194 million year over year. Unfortunately, its loss per share did jump from 15 cents to 44 cents in the most recent quarter.
Greg Cameron, executive vice president and CFO of Bloom Energy added in the company’s quarterly earnings release, “We’re off to a great start to the year – we delivered record Q1 revenue and our commercial pipeline is strong, in line with our expectations. We remain confident in our business and are reaffirming our 2022 financial guidance.”
Plug Power (PLUG)
Another top hydrogen stock to consider is Plug Power. The company just said revenue grew from $72 million to $140.8 million. Unfortunately, its loss per share also grew from 12 cents to 27 cents year over year.
Helping, Susquehanna analyst Biju Perincheril says the company has made “meaningful progress advancing agreements for electolyzer deployments, especially in Europe,” as noted by TheFly.com. “He thinks the company could finish the year with more than double the original target with additional wins expected in the second half.”
Even more impressive, Plug Power is investing $315 million in a new European facility in Belgium, which should come online by 2025, and could create about 12,500 tons per year of green hydrogen.
Ballard Power Systems (BLDP)
Or take a look at Ballard Power Systems, which provides fuel cell power for the electrification of buses and trucks.
In its most recent quarter, the company saw revenue jump about 19% to $21 million year over year. It also saw new orders of $27.8 million, mostly from Europe.
Most recently, Ballard Power partnered with Wisdom Motor Company, Templewater Group and Bravo Transport Service to accelerate the adoption of fuel cell electric vehicles in Hong Kong. “Wisdom’s hydrogen vehicle product lines will exclusively deploy Ballard’s world leading PEM fuel cell technology, with modules supplied by the Weichai-Ballard Joint Venture in China,” as noted in a company press release.
Ballard is also oversold at triple bottom support around $6 a share. Near-term, I’d like to see the stock challenge prior resistance around $8 a share. Longer-term, I’d like to see BLDP closer to $9 a share.
FuelCell Energy (FCEL)
I’m also keeping an eye on FuelCell Energy, which designs, manufactures, and operates fuel cell plants. After plunging from about $12 to a recent low of $2.87, the stock caught strong double bottom support. With patience, I’d like to see the FCEL stock challenge $8 a share again, near-term.
Unfortunately, earnings weren’t so hot. In fact, the company lost 8 cents a share, which was worse than an expected five-cent loss. It also posted revenue of $16.38 million, which was nowhere near expectations for $32.58 billion. The only good news about revenue was that it was above the $13.95 billion posted a year earlier.
As with other hydrogen names, don’t write it off. Once the hydrogen boom really gets going, FCEL could see higher highs.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.