Get ahead of the next wave in energy infrastructure
- Bid up these hot hydrogen growth stocks before the masses catch on.
- Nel (NLLSF): Nel presents risks but also promise.
- Shell (SHEL): Shell is investing heavily in green hydrogen.
- Air Products & Chemicals (APD): APD offers contemporary relevance.
- Bloom Energy (BE): Bloom is a higher-risk, higher-reward venture.
- FuelCell Energy (FCEL): FuelCell offers relevancies in exchange for risk.
- Ballard Power Systems (BLDP): Ballard Power is one for the believers.
- Plug Power (PLUG): Plug enjoys a rare consensus strong buy rating.
Although the recent soft sessions may have dampened investor sentiment, it’s important to look ahead, particularly with the top hydrogen growth stocks. According to the International Energy Agency, hydrogen garnered significant interest. In fact, it stated in 2019 that clean hydrogen “…is currently enjoying unprecedented political and business momentum, with the number of policies and projects around the world expanding rapidly.”
Arguably, even the top hydrogen growth stocks to buy can’t live off narratives alone. Fortunately, the hard numbers bode very well for the underlying industry. According to Grand View Research, the global hydrogen generation market reached a valuation of $129.85 billion in 2021. Further, analysts project that the sector will expand at a compound annual growth rate (CAGR) of 6.4% from 2022 to 2030.
Here’s the kicker. At the culmination of the forecasted period, the hydrogen industry should command total revenue of $225.55 billion. Given recent geopolitical flashpoints, this assessment could be understated. Therefore, it’s well worth your time to consider hydrogen growth stocks to buy.
|APD||Air Products & Chemicals||$280.98|
Headquartered in Oslo, Norway, Nel (OTCMKTS:NLLSF) is a global company providing solutions for the production, storage and distribution of hydrogen from renewable energy sources. Despite its seemingly risky nature – being traded in the over-the-counter market – NLLSF represents a solid performer. For example, in the trailing year, shares gained nearly 18% of equity value. For the new year, it’s up nearly 19%.
To be fair, Nel will require tremendous investor patience, even among hydrogen growth stocks, which generally present a riskier profile. For instance, on a trailing-year basis, both its operating and net margins rank well below breakeven. Naturally, other associated metrics such as return on equity and return on asset swims in red ink as well.
On the other hand, it’s not a purely speculative idea. In particular, it features a robust balance sheet. Its cash-to-debt ratio stands at 22.16, beating out 81.63% of its peers. Finally, covering analysts peg NLLSF as a consensus hold. Still, their average price target stands at $1.72, implying over 8% upside potential.
A giant among global big oil firms, Shell (NYSE:SHEL) obviously made a name for itself in the hydrocarbon industry. However, the company’s also diving into the hydrogen ecosystem. Per its website, the company will build the Holland Hydrogen I, which will be Europe’s largest renewable hydrogen plant once operational in 2025. In the trailing year, SHEL gained nearly 17% of equity value.
Despite its relevancies and solid market performance, Shell offers an objectively discounted investment. Currently, the market prices SHEL at a trailing multiple of 5.28. As a discount to earnings, Shell ranks better than 64.66% of the competition.
Operationally, the company fires on all cylinders. Its three-year revenue growth rate pings at 9.2%, above nearly 70% of its peers. Further, its net margin is just above 11%, outpacing over 63% of rivals.
Turning to Wall Street, covering analysts peg SHEL as a consensus moderate buy. In addition, their average price target stands at $65.76, implying over 9% upside potential. Thus, it makes for a reliable entry among hydrogen growth stocks to buy.
Air Products & Chemicals (APD)
Headquartered in Allentown, Pennsylvania, Air Products & Chemicals (NYSE:APD) has a principal business which involves selling gases and chemicals for industrial uses. Therefore, it represents a fundamentally reliable and presently relevant candidate for hydrogen growth stocks. Subtly confirming this point, APD gained nearly 19% of equity value in the trailing year.
To be fair, APD did encounter a hiccup recently. Since the January opener, APD shed nearly 9% of market value. However, according to Gurufocus.com’s proprietary calculations for fair market value (FMV), Air Products rates as modestly undervalued.
Operationally, the company really comes alive. Presently, its three-year revenue growth rate stands at 12.3%, outpacing 70.38% of sector rivals. On the bottom line, its net margin pings at 17.61%, blowing past 86.33% of the industry. In addition, its return on equity reached 16.55%, reflecting a high-quality business.
Lastly, Wall Street analysts peg APD as a consensus moderate buy. Their average price target stands at $330.91, implying over 18% upside potential.
Bloom Energy (BE)
Based in San Jose, California, Bloom Energy (NYSE:BE) manufactures and markets solid oxide fuel cells that produce electricity on-site. According to its public profile, Bloom’s fuel cells are subsidized by government incentive programs for green energy. As of 2020, Bloom had installed about 600 megawatts worth of fuel cells. Over the trailing year, BE gained over 12% of equity value.
Further generating investor excitement, BE moved up almost 17% since the Jan. opener. However, finding more justification for bidding up Bloom will require some patience and faith. Let’s be blunt: its financials could use a lot of work.
Operationally, its three-year revenue growth rate went 1.8% below parity. It’s not unusual for the underling industry but obviously, it’s not a great development. Also, its profit margins rank well into the crimson depths. Plus, its Altman Z-Score (also in negative territory) reflects a distressed enterprise.
Still, Wall Street believes it’s one of the hydrogen growth stocks to buy. Analysts peg BE as a consensus moderate buy with a price target implying over 30% upside potential.
FuelCell Energy (FCEL)
A fuel cell specialist as its name implies, FuelCell Energy (NASDAQ:FCEL) designs, manufactures, operates and services Direct Fuel cell power plants. Further, its public profile states that the company’s technology is an alternative to traditional combustion-based power generation and is complementary to intermittent sources of energy, such as solar and wind turbines. Since the Jan. opener, FCEL gained over 27% of equity value.
However, FCEL ranks among the riskiest hydrogen growth stocks to buy. For example, in the past 365 days, shares stumbled almost 36%. Financially, it’s not difficult to understand why. In particular, its three-year revenue growth rate sits over 32% below parity. Also, its net margin fell well into negative territory.
If that wasn’t enough, Gurufocus.com warns that FuelCell represents a possible value trap. With that said, the company benefits from a reasonably robust balance sheet. For instance, its cash-to-debt ratio is 4.39, outpacing nearly 70% of its rivals.
Presently, Wall Street analysts peg FCEL as a consensus hold. However, their average price target stands at $3.95, implying almost 17% upside potential.
Ballard Power Systems (BLDP)
One of the most popular speculative names among hydrogen growth stocks, Ballard Power Systems (NASDAQ:BLDP) is a developer and manufacturer of proton exchange membrane fuel cell products for markets such as heavy-duty motive, portable power, material handling as well as engineering services. Since the January opener, BLDP gained nearly 22% of equity value.
However, that’s not the whole story. In the trailing year, shares hemorrhaged nearly 40%. Therefore, BLDP is only for those who want to swing for the fences – and can accept the consequences should that wager go awry. Chances are, it probably will.
Gurufocus.com also warns that Ballard Power represents a possible value trap. At the moment, the company suffers from declining salles growth and negative margins. However, on the positive front, Ballard features a strong cash-rich balance sheet. As well, the market prices BLDP at 1.46-times book value, coming in lower than nearly 63% of its peers.
As a clear warning, Wall Street analysts peg BLDP as a consensus moderate sell. However, its last individual buy rating (from B. Riley Financial’s Christopher Souther) forecasted a price target of $9, implying over 56% upside potential.
Plug Power (PLUG)
Focusing on the development of hydrogen fuel cell systems, Plug Power (NASDAQ:PLUG) consistently attracted speculative interest among those seeking viable hydrogen growth stocks to buy. Ultimately, the company aims to replace conventional batteries in equipment and vehicles powered by electricity. Since the Jan. opener, PLUG stock gained over 20% of equity value.
Like some of the other hydrogen growth stocks, Plug Power will require significant patience. As a pure-play hydrogen idea, it may incur wild volatility. For instance, during the trailing year, shares tumbled 33%. Naturally, that’s not going to inspire confidence.
And neither will the financial profile, with Plug Power suffering from deeply negative profit margins. On the top line, circumstances ring relatively much better. Its three-year revenue growth rate is 4.2%. However, it’s barely above the median performance for the industry.
Despite significant challenges, covering analysts peg PLUG as a consensus strong buy. As well, their average price target stands at $29.42, implying nearly 101% upside potential.
This post originally appeared at InvestorPlace.
On the date of publication, Josh Enomoto did not have (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.