Stocks to buy

7 Hydrogen Stocks Sitting in the Sweet Spot

Hydrogen could be one of the most explosive opportunities. After all, it emits no greenhouse gas, and the only waste product is vapor. And it could create a multi-trillion-dollar opportunity for long-term hydrogen investors. Even better, Goldman Sachs, for example, says the market for hydrogen production could reach $1 trillion by 2050. To reach net-zero emissions, the firm says about $5 trillion will need to be invested in the hydrogen supply chain. Along the way, it could lead to a massive opportunity for some of the top hydrogen stocks to buy.

With the Inflation Reduction Act, the U.S. is set to be “positioned to be one of the lowest green hydrogen production cost regions in the world, at $0.5 to $1.5 per kg of green hydrogen, which is going to substantially boost the demand in the U.S., potentially growing to ~30 MTPA by 2030 to 35, setting a precedent for other countries to follow,” as noted by EY.com.

In addition, according to the International Energy Agency, global hydrogen demand will need to double from about 94Mt in 2021 to more than 180 by 2030. Europe may need to see a six-fold increase in demand by 2050. So, it’s no surprise that some analysts foresee a multi-trillion-dollar hydrogen opportunity.

That being said, it’s a good idea to load up on hydrogen stocks for the long term.

Hydrogen Stocks to Buy: Defiance Next Gen H2 ETF (HDRO)

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One of the best ways to diversify with top hydrogen stocks to buy is with an ETF, such as the oversold Defiance Next Gen H2 ETF (NYSEARCA:HDRO) – which currently sits at strong support.

Not only does this ETF offer a good deal of exposure to hydrogen stocks, but it does so at an impressively lower cost. For example, the HDRO ETF, which has an expense ratio of 0.30%, trades at around $10 a share. With this ETF, investors gain exposure to stocks such as Plug Power (NASDAQ:PLUG), Bloom Energy (NYSE:BE), Ballard Power (NASDAQ:BLDP), Fuel Cell Energy (NASDAQ:FCEL), and dozens more.

To be included in this ETF, a company must generate 50% of its revenue from hydrogen and/or a fuel cell project, or be involved in developing fuel cells or hydrogen sources, according to Defiance ETFs.

Hydrogen Stocks to Buy: Direxion Hydrogen ETF (HJEN)

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Another one of the top hydrogen stocks to buy is the Direxion Hydrogen ETF (NYSEARCA:HJEN). Not only does it give investors exposure to top hydrogen stocks, but it also does so at below $15 per share.

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

Plus, after a recent pullback with the broader market, the ETF appears to have caught strong support around $13.75. From here, I’d like to see it run back to $15.50 initially.

Hydrogen Stocks to Buy: Global X Hydrogen ETF (HYDR)

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Let’s toss in one more ETF for good measure. After all, I’m a big fan of ETFs, especially when it comes to a sector as potentially explosive as hydrogen. With an expense ratio of 0.50%, the Global X Hydrogen ETF (NASDAQ:HYDR) is also excessively oversold at the moment and is another solid fit among top hydrogen stocks to buy.

This one, in particular, invests in companies involved in hydrogen production; the integration of hydrogen into energy systems; and the development/manufacturing of hydrogen fuel cells and electrolyzers, including Bloom Energy, Plug Power, Ballard Power, and Ceres Power (OTCMKTS:CPWHF).

Air Products & Chemicals (APD)

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Air Products & Chemicals is another one of the top hydrogen stocks to buy. The company owns and operates more than 100 hydrogen plants around the world. It’s also involved in more than 250 hydrogen-fueling projects all over the world. Most recently, it announced plans, in partnership with AES, to invest $4 billion in its first huge green hydrogen facility, which will be located in Texas. It also just received over $130 million in NASA contracts to provide liquid hydrogen for several NASA locations.

Even better, the company increased its quarterly dividend from $1.62 to $1.75 per share—representing an 8% increase. This marks the 41st consecutive year that Air Products has increased its dividend payment. The dividend is payable on May 8, 2023, to shareholders of record at the close of business on April 3, 2023.

Linde (LIN)

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Another hot trade on the hydrogen boom is Linde (NYSE:LIN). Its Niagara Falls plant, scheduled to open in 2025, will use carbon-free hydroelectric power to make hydrogen. In fact, according to Barron’s, “Hydrogen now represents less than 10% of Linde’s sales, but analysts see it growing in importance as the company invests in projects worth tens of billions of dollars.”

The company also said it was allocated $33 billion to clean energy investments, most of which will be hydrogen-related. Plus, BMO Capital Markets says investors should use any weakness in LIN as a buying opportunity. They also see “upside potential beyond our $370 target price.”

Earnings have been just as impressive. For 2022, it posted an adjusted operating profit of $7.9 billion, up 10% year over year. Income jumped 11% to $6.2 billion, with sales up 8% to $33.3 billion. It also believes it’s on track for a record year in 2023.

Bloom Energy (BE)

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Another top hydrogen stock is Bloom Energy, which manufactures solid oxide fuel cells. Bloom’s fuel cells are being used by retailers, healthcare centers, and auto manufacturers.

Earnings have been strong. While its fourth-quarter net loss widened to $47.17 million, or 23 cents a share, from a loss of $33.32 million, or 19 cents a share, year over year, its adjusted was 27 cents, which was ahead of estimates for nine cents. Revenue jumped to $462.5 million from $342.4 million, year over year. That was also ahead of expectations for $398.7 million. Looking ahead, Bloom Energy said it expects 2023 revenue of $1.4 billion to $1.5 billion, as compared to analyst expectations for $1.48 billion.

Plug Power (PLUG)

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Plug Power, like many of its peers, was beaten up over the last year. However, as the hydrogen market explodes, this is one of the top stocks to own – especially with its current deals with Walmart (NYSE:WMT), Amazon (NASDAQ:AMZN), Home Depot (NYSE:HD), Nike (NYSE:NKE), Boeing (NYSE:BA), and FedEx (NYSE:FDX),to name a few.

Plug also announced it expanded its GenKey offering to enable fuel cell adoption for warehouses that operate less than 100 electric forklifts. “For the first time, this segment of the forklift market, representing more than 25% of all forklifts sold in the U.S., will have access to cost-effective hydrogen fuel cells and the increased productivity they unlock,” says the release.

It also announced the historic flight of a regional airliner powered by the company’s line of ProGen fuel cells. The plug also popped on news that Nikola and Chart Industries announced an agreement regarding hydrogen storage. That was beneficial to Plug because it suggests the hydrogen market is gaining momentum.

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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