Hydrogen stocks represent enterprises involved in the manufacturing and delivery of hydrogen fuel. Hydrogen is a clean-burning energy source with various applications, including transportation, power generation, and industrial applications.
Hydrogen fuel has numerous potential advantages, but it is still a relatively young technology. Consequently, hydrogen stocks are frequently viewed as high-risk, high-reward investments. Hydrogen equities are typically more volatile than the entire stock market and susceptible to government laws and regulations changes. Hydrogen stocks are not suitable for all investors for these reasons. However, investors with a high-risk tolerance may find tremendous profit potential in hydrogen stocks. If this has piqued your interest in hydrogen stocks, consider the ten finest hydrogen stocks on the market now.
What You Should Know About Hydrogen Investments
There are numerous methods for producing hydrogen. Carbon dioxide is a byproduct of several processes. For instance, the industry refers to hydrogen produced by the combustion of natural gas as “blue hydrogen.” This kind of hydrogen requires carbon collection and underground storage to achieve zero greenhouse gas emissions. Another option is using renewable energy to power an electrolyzer that separates hydrogen from water molecules. This procedure produces carbon-free, environmentally friendly hydrogen.
Hydrogen fuel cells generate electricity through an electrochemical reaction, similar to batteries. Instead of recharging like conventional batteries, hydrogen fuel cells are refueled with more hydrogen. We may utilize hydrogen fuel cells to stationary power devices and to propel automobiles, trains, buses, ships, and trucks. Minimal proponents argue that, with some modifications, hydrogen could replace natural gas in the pipeline system; it could then be utilized in power plants to create electricity and as a fuel source in our homes. Due to its potential, some estimates place the eventual value of the market for green hydrogen at as much as $10 trillion.
Green hydrogen is expensive, despite its potential as an emissions-free fuel source. In 2020, it cost between $18.58 and $33.44 per dekatherm to manufacture green hydrogen. For comparison’s sake, natural gas production prices ranged between $1 and $4.50 per dekatherm. However, declining costs make green hydrogen increasingly competitive with natural gas.
What Makes Hydrogen Stocks Attractive?
Hydrogen is a critical component for assisting nations in reducing energy-use emissions and achieving net-zero emissions by 2050. It is a cheaper and more environmentally friendly alternative to natural gas.
The British government has pledged up to £4 billion in hydrogen infrastructure investments between now and 2030. The target is to generate enough hydrogen to displace natural gas used for home heating and cooking in about 3 million households. The government anticipates that between 25 and 30 percent of UK households will be powered by hydrogen by 2050. President Joe Biden’s infrastructure program in the United States contains $8 billion to capture, deliver, and store clean hydrogen.
Numerous large and small firms are developing hydrogen technologies, including hydrogen fuel cells and automobiles that operate on them, as well as enterprises that create hydrogen. These stocks’ long-term growth potential makes them appealing trading and investment vehicles. If hydrogen acquires traction as an alternative fuel source, these equities could have the same potential as oil and gas firms when they were in their infancy decades ago.
Benefits Of Hydrogen
When burned with oxygen, hydrogen fuel creates just water, a little heat, and energy, with no CO2 or particle emissions.
Many consider hydrogen fuel the energy of the future because it produces no externalities that could have a detrimental influence on public health or the environment and are, therefore, fundamentally clean.
Hydrogen fuel is compatible with both fuel cells and internal combustion engines. The technology of hydrogen fuel cells, in particular, is gaining growing interest from enterprises and investors.
Fuel cell technology is distinctive in that it can provide power for devices as large as utility power stations and as small as laptop computers.
Using the idea of mixing hydrogen and oxygen to generate clean electricity, hydrogen fuel cells can power almost anything, including automobiles, delivery vehicles, residential structures, drones, airplanes, and even futuristic technologies such as air caps.
As an increasing number of enterprises enter the energy market and create the so-called hydrogen economy – the revolution transferring the economy from fossil-fuel based to hydrogen to attain a net zero world, it is almost as if we are already living in the future.
Top 10 Hydrogen Stocks to Buy Now
1. Air Products
Air Products is a global leader in the distribution of industrial gases. It is a worldwide pioneer in technology and equipment processing liquefied natural gas (LNG). It is also one of the world’s leading providers of commercial hydrogen and a leader in the infrastructure for hydrogen fuel.
Air Products strives to be an industry leader in addressing the world’s energy and environmental concerns through gasification, carbon capture, and clean hydrogen. It intends to finish several significant hydrogen projects in the future years. These include a $4.5 billion blue hydrogen project in Louisiana, a $7 billion carbon-free hydrogen joint venture in Saudi Arabia, and a $1 billion net-zero hydrogen project in Canada, all of which are expected to go into operation between 2024 and 2026. Due to this trio and upcoming initiatives, Air Products is positioned to remain a global leader in hydrogen energy.
2. Plug Power
Plug Power is a pioneer in the industry of hydrogen fuel cells. It established the first commercially feasible hydrogen fuel cell technology market. It has introduced a market-leading 50,000 fuel cell systems for e-mobility (using electric powertrain technologies to power vehicles and fleets). It is one of the significant hydrogen importers globally and operates North America’s premier hydrogen refueling network.
Plug Power is constructing multiple hydrogen plants in North America as part of its green hydrogen-producing network. It anticipates beginning work on several more that will commence operations in the following years. The company intends to create the world’s first green hydrogen ecosystem, establishing itself as the market leader in this enormous market opportunity.
Cummins, a leader in natural gas and battery technology, stated in May 2021 that it would provide Spain with one of the largest electrolyzers in the world. It is a joint venture with Iberdrola to lead the hydrogen value chain in the United States and Portugal and increase hydrogen production in the region. Cummins also continues to expand its capacity to service the entire hydrogen economy and utilizes fuel cell technologies to power a variety of vehicles, including buses and trucks. At the close of 2019, Cummins acquired Hydrogenics to bolster its knowledge of hydrogen fuel cells and to facilitate the development of novel manufacturing processes.
4. FuelCell Energy Inc.
After the passage of the Inflation Reduction Act, this green hydrogen company rejoiced. “Under the IRA, users and producers of fuel cell technology will be able to take advantage of investment tax credits, production tax credits for clean power and hydrogen, and carbon capture utilization and sequestration credits – all of which are significant incentives for building and deploying more clean energy assets,” FuelCell Energy said. FuelCell is at the forefront of the green hydrogen movement as a producer of fuel cell platforms for decarbonizing power and creating hydrogen. Boughedda is encouraged by the recent increase in sales. However, the business is not lucrative. “Despite the potential for substantial returns, pre-profit companies carry a higher risk for investors,” he argues.
5. Ballard Power Systems
Ballard Power Systems created a hydrogen-powered, zero-emission proton exchange membrane (PEM) fuel cell. It electrifies buses, commercial trucks, railroads, marine vessels, passenger cars, and forklifts.
Additionally, the company is developing new technologies that utilize hydrogen energy. It teamed with Swiss industrial giant ABB (NYSE: ABB) in early 2022 to create fuel cells to power ships. It has also teamed with the Adani Group, an Indian conglomerate, to examine investing in the commercialization of hydrogen fuel cells in India. In addition, it announced a successful test to power fuel cells with liquid hydrogen with Chart Industries (NYSE: GTLS). The investments equip Ballard Power Systems to become a leader in the burgeoning hydrogen market.
6. Powerhouse Energy Group
Although it is less scalable than other processes, turning garbage into green energy is gaining popularity. Powerhouse Energy Group has created unique technology to transform landfill-bound plastic, tires, and other waste streams into hydrogen-based synthetic gases. The company stated in August 2021 that it had signed a contract with Hydrogen Utopia to use its technology in Poland, Greece, and Hungary. Powerhouse Energy Group also has an agreement with Peel NRE to build eleven waste-to-hydrogen plants in the United Kingdom over the next five years, with the option to create an additional seventy sites.
Linde, a German gas and engineering firm, is regarded as one of the pioneers at the vanguard of the move to hydrogen. Linde has constructed and installed over 200 hydrogen electrolysis facilities and hydrogen refueling stations and has the world’s largest liquid hydrogen capacity and distribution infrastructure. Linde announced the world’s largest PEM (proton exchange membrane) electrolyzer plant, which will go into production in the second half of 2022, at the beginning of 2021. ITM Power will construct the electrolyzer as part of the joint venture between the two firms.
8. Fusion Fuel Green PLC
Fusion Fuel Green PLC creates green hydrogen-related technology. The business develops an integrated solar-to-hydrogen system for hydrogen production off-grid. Their objective is to give new green hydrogen solutions to the world. The company is well-known for producing a novel electrolyzer design that makes hydrogen generation more cost-effective.
In 2020, Fusion Fuel Green PLC went public, having been created in 2018. Since then, the company’s stock price has fluctuated. The company’s stock price is predicted to double within the next year, following significant price changes over the past couple of years.
9. Direxion Hydrogen ETF
Owning an exchange-traded fund, including numerous firms, is one approach to hedging against risk. HJEN comprises businesses engaged in hydrogen generation and storage, fuel cells, stations, and hydrogen-powered vehicles. Some HJEN members are not green hydrogen specialists, yet this could be a benefit. “Pure-play companies may not be ideal for many investors due to their volatility,” adds Kahn. Although critical firms in the gray hydrogen industry, such as Linde PLC (LIN) and L’Air Liquide SA (AIQUY), among the top 10 holdings of this ETF, are not pure-play green hydrogen stocks, they are expanding in the green hydrogen market. With their extensive experience in the hydrogen industry, these assets contribute to the ETF’s diversity and may act as a volatility buffer.
10. Global X Hydrogen ETF
Linde is also included in this ETF, along with manufacturers Toyota Motor Corp. (TM) and Nikola Corp. (NKLA) and pure green hydrogen play such as Ballard and Plug Power. Given that the hydrogen theme is in its earliest phases of acceptance, Global X analyst Madeline Reid believes that investing in the Global X Hydrogen ETF provides the possibility to invest in both the current leaders within the hydrogen value chain and the prospective vital players of the future. She argues that the expansion of the global hydrogen industry will be beneficial to businesses engaged in hydrogen generation, hydrogen grid integration, and hydrogen fuel cells and electrolyzers. She says, “We feel now is an excellent moment to invest in hydrogen since there are major tailwinds in place that might lead to robust growth prospects in the future.”
The Prospects for Hydrogen
“Hydrogen is a natural replacement for fossil fuel in energy-intensive industrial operations,” argues the head of sustainable investing at Citi Private Bank, Harlin Singh. She believes it’s energy dense, transportable, and can be kept between seasons.
According to her, hydrogen will be crucial for fueling commercial vehicles and replacing diesel. It can also play a key role in energy-intensive and difficult-to-decarbonize industries such as steel, chemical manufacture, and transport.
Numerous countries are attempting to pave the path for green hydrogen as an energy source. Hydrogen is included in the European Union’s REPowerEU initiative. China has a hydrogen road map until 2035 that outlines the country’s strategy for expanding its domestic hydrogen sector. In the United States, Democrats attempted to pass a tax credit for green hydrogen through the Build Back Better Act; it has stalled, but there is still interest in stimulating the creation of a domestic hydrogen industry.
According to Hua Cheng, portfolio manager at Mirova US, the sustainable investing affiliate of Natixis Investment Managers, “we see significant growth potential throughout the entire value chain of the hydrogen business, from green hydrogen production with renewable energy, to electrolyzer technologies such as hydrogen production enablers, to hydrogen distribution, and finally, to end-market applications in transportation, industrial energy, and power generation.”
Many believe that hydrogen will be essential to attaining net zero emissions by 2050 and that its growth will be significant over the next several decades. Yet, the technology is still in its infancy. Cheng identifies two tremendous obstacles to investing in hydrogen: the price of green hydrogen and the volatility of hydrogen equities.
“Over the past decade, the price of green hydrogen has decreased rapidly, but it is still more expensive than traditional energy in general,” he explains. In the coming years, the price will likely continue falling and becoming cost-competitive with traditional energy, primarily because of the anticipated decrease in renewable energy and electrolyzer technology.
Adam Rozencwajg, the managing partner of investment firm Goehring & Rozencwajg, notes that 70% of the energy is squandered in the manufacturing of green hydrogen, making it “very energy inefficient.”
What factors influence the price of a share of hydrogen?
Potential earnings and anticipated product demand may influence the price of hydrogen stocks. This is a speculative business. Therefore traders and investors are putting wagers based on what these companies might do rather than what they have done (as may be the case when investing in an established company). Learn more about stock analysis for companies.
Are hydrogen stocks in a bubble?
Due to the speculative nature of hydrogen stocks, price fluctuations are common. The future market for their products is uncertain; many still need earnings or low sales or profits. This indicates that the price may be volatile, with huge swings up and down. Short-term bubbles are prevalent as investors go through phases of excitement and disillusionment with the technology. Learn about bubbles in the stock market.
The most excellent hydrogen stocks have been a popular topic of conversation over the past year, as the hydrogen economy is predicted to continue expanding over the next few decades. As a result of the declining costs of hydrogen and green hydrogen and the expansion of the international market, the ten hydrogen companies listed above are projected to provide substantial returns for investors in the following years.