Stocks to buy

3 Hydrogen Stocks to Buy to Bet on the “Fuel of the Future”

Hydrogen is  the fuel of the future. In fact, major companies are already betting on that. BP (NYSE:BP), for example, wants to advance the transition to hydrogen and help decarbonize industries with it. Meanwhile, Hyundai (OTC:HYMTF) is trying to dominate the world of hydrogen trucking in the U.S., and Toyota (NYSE:TM) just unveiled a new hydrogen-powered pickup and SUV. Finally, BMW (OTC:BMWYY) will reportedly test its iX5 hydrogen fuel cell SUV  in the spring. Even the UK government wants to ban gas boilers in homes by 2026, replacing them with heating systems that can be fueled with hydrogen. Because of these companies’ efforts on the hydrogen front,  we put together this list of three hot hydrogen stocks to buy.

According to the Hydrogen Council, “Hydrogen is central to reaching net zero emissions because it can abate 80 gigatons of CO2 by 2050. Hydrogen has a central role in helping the world reach net-zero emissions by 2050 and limiting global warming to 1.5 degrees Celsius. Complementing other decarbonization technologies like renewable power, biofuels, or energy efficiency improvements, clean hydrogen (both renewable and low carbon) offers the only long-term, scalable, and cost-effective option for deep decarbonization.”

So it comes as little surprise that some analysts foresee a multi-trillion-dollar hydrogen opportunity.

Goldman Sachs, for example, believes that the hydrogen space could become a $12 trillion market by 2030. And Bank of America says green hydrogen could be worth more than $11 trillion by 2050, while Morgan Stanley also thinks that hydrogen could become an $11 trillion opportunity. Here are three top hydrogen stocks to buy.

HJEN Direction Hydrogen ETF $15.05
BE Bloom Energy $24.17
APD Air Products & Chemicals $325

Direxion Hydrogen ETF (HJEN)

Source: Alexander Kirch / Shutterstock.com

Let’s start out with Direxion Hydrogen ETF (NYSE:HJEN). Not only does it give investors exposure to a variety of top hydrogen stocks, but it also does so at a low per-share cost of $15.05.

With an expense ratio of 0.45%, this ETF holds 30 companies that are in the following sectors:  Hydrogen production and generation, storage and supply, fuel cells and battery, and systems and solutions. The ETF also features companies that design and produce membranes.

Some of the ETF’s top holdings include Plug Power (NASDAQ:PLUG), Bloom Energy (NYSE:BE), Ballard Power (NASDAQ:BLDP), Air Products and Chemicals (NYSE:APD), and Doosan Fuel Cell Co..

Bloom Energy (BE)

Source: Sundry Photography / Shutterstock

One of the most well-known hydrogen stocks is Bloom Energy, which manufactures solid oxide fuel cells. Bloom’s fuel cells are being used by retailers, healthcare centers, auto manufacturers, and major companies such as Honda (NYSE:HMC), Owens Corning (NYSE:OC), Adobe (NASDAQ:ADBE), Alphabet (NASDAQ:GOOG, GOOGL), FedEx (NYSE:FDX), Juniper Networks (NYSE:JNPR), Verizon (NYSE:VZ), Kellogg’s (NYSE:K). Overall, dozens of companies are utilizing Bloom’s products.

Bloom’s earnings have been solid. Last quarter, its revenue jumped 41% year-over-year to $292.3 million. Its gross margins slipped only slightly from 17.8% in Q3 of 2021 to 17.4% last quarter.

Bloom also strengthened its liquidity position and reaffirmed its full-year revenue guidance of $1.1 billion to $1.15 billion.

In another positive development, UBS analyst Manav Gupta initiated BE stock with a “buy” rating and placed a price target of $35 on the name. Jefferies analyst Sam Burwell also initiated coverage with a “buy” rating, and he set a $29 price target on Bloom.

Air Products & Chemicals (APD)

Source: Andy Borysowski / Shutterstock.com

Air Products & Chemicals (NASDAQ:APD) is another one of the top hydrogen stocks to buy. The company owns and operates more than 100 hydrogen plants around the world. APD has also been involved in more than 250 hydrogen-fueling projects all over the world. and it even fuels cars, trucks, and buses. Most recently, APD announced plans, in partnership with AES, to invest $4 billion in its first huge green hydrogen facility, which will be located in Texas.

In fact, according to an APD press release, “This mega-scale renewable power to hydrogen project includes approximately 1.4 gigawatts (GW) of wind and solar power generation, along with electrolyzer capacity capable of producing over 200 metric tons per day (MT/D) of green hydrogen, making it the largest green hydrogen facility in the United States.”

Even more impressively,  Deutsche Bank raised its price target on APD to $340 from $292 and kept a “buy” rating on the shares. BMO Capital also raised its price target on the shares, increasing it to $390 from $339. BMO kept an outperform rating on the stock.

 Air Products declared a quarterly dividend of $1.62 per share. The dividend is payable on February 13 to shareholders of record as of the close of business on Jan. 3.

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.

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.

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