As the world continues to focus on green energy, there are multiple investment themes that are still at an early growth stage. The global hydrogen economy is likely to play a big role in the energy transition. With growth likely to sustain beyond the decade, it’s still a good time to consider some of the best hydrogen stocks to buy.
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To put things into perspective, the demand for hydrogen for global consumption was 87 million MT in 2020. Demand is expected to swell to 212 million MT by 2030 and further to 528 million MT by 2050. The demand will primarily come from heavy industry, power generation, and the production of hydrogen-based fuels.
Given the demand outlook, some of the best hydrogen-focused companies are positioned for multi-fold growth. It goes without saying that there are several hydrogen stocks with explosive upside potential.
Let’s discuss three of the best hydrogen stocks to buy for robust gains.
Air Products and Chemicals (APD)
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Air Products (APD) logo on the Arts Quest building, Air Products is a sponsor of Air Products Town Square at Arts Quest in Bethlehem, PA
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Air Products and Chemicals (NYSE:APD) stock is possibly the best hydrogen stock to buy. At a forward price-earnings ratio of 25.7, the stock looks attractive and offers a dividend yield of 2.39%.
A key reason to like Air Products is the financial flexibility. In the last 12 months, the company has reported investable cash flows (after dividends) of $1.7 billion. This provides ample flexibility to make investments in hydrogen projects.
Talking about the projects, NEOM Green (Saudi Arabia) is expected to produce up to 600 tonnes of carbon-free hydrogen per day in the form of green ammonia. Further, the company’s $1.6 billion hydrogen facility in Canada is under construction. In the United States, the company is investing $4.5 billion to produce low-carbon hydrogen to power mobility and industrial markets.
Clearly, Air Products is making aggressive investments in hydrogen fuel. This is likely to deliver results in terms of growth and cash flow upside in the coming years.
Plug Power (PLUG)
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Plug Power logo on computer screen. PLUG stock.
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Plug Power (NASDAQ:PLUG) stock has declined by 25% in the last 12 months. I see this correction as a good opportunity to consider some exposure.
As an overview, Plug Power is a provider of hydrogen fuel cell turnkey solutions. For 2023, the company expects to deliver revenue of $285 million from the energy solutions business. Consolidated revenue (all business segments) is likely at $1.4 billion with a 10% gross margin.
It’s worth noting that Plug Power expects revenue of $3.9 billion from the energy solution business by 2030. In terms of current expansion plans, the company expects a hydrogen plant capacity of 200TPD by the end of the year. Capacity is likely to increase to 500TPD by 2025. Similarly, the applications business is expected to reach $9 billion by 2030. The best part of growth is still to come, and PLUG stock can be a potential multibagger from current levels.
Bloom Energy (BE)
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Bloom Energy logo at their headquarters in Silicon Valley
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Bloom Energy (NYSE:BE) is another interesting name to consider. BE stock has been sideways in the last year and is poised for a big breakout.
As an overview, the company’s solid oxide fuel cell technology is likely to play an important role in advancing the hydrogen economy. An important point to note is that the company’s solid oxide fuel cells have already been deployed in applications across healthcare, data centers, and critical manufacturing, among others. The company is looking to execute large projects in 2024 and beyond. This is a key catalyst for BE stock surging higher.
From a financial perspective, Bloom Energy expects revenue of $1.4 to $1.5 billion for 2023. Further, the non-GAAP operating margin is likely to turn positive. I believe that margin expansion in 2024 and beyond will be another key catalyst for a significant rally.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
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