What Are The Hottest Top 5 Hydrogen Stocks?

What Are The Hottest Top 5 Hydrogen Stocks? - Carbon Herald
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Hydrogen is one of the most abundant elements in the universe and apart from that is also considered the dream fuel of the future. It is efficient, flexible, reliable and above all – 100% green. That is why hydrogen stocks are on the rise in terms of popularity, investments, and expansion as the world is looking for non-polluting fuels that could drive the economy. 

We have also created a 85-page primer on the hydrogen industry and combined it with in-depth fundamental and technical analysis of five stocks – Plug Power, FuelCell Energy, Nikola, Bloom Energy and Ballard Power Systems. Click this Hydrogen Industry and Stocks Report link to learn more and download it at a discounted price of $49.99 during our holiday promotion!

The companies that we are going to look at in this article are deemed the top hottest hydrogen stocks right now that offer the biggest potential to ride the wave of the green energy future. These hydrogen energy stocks are Plug Power, FuelCell Energy, Bloom Energy, Ballard Power Systems, and Nicola stock.  

Carbon capture stocks could also be on the rise, check out our list here: What Are The Top 5 Carbon Capture Stocks?

Benefits Of Hydrogen

When burned with oxygen, the hydrogen fuel produces just water, a bit of heat, and releases energy, without any emissions like CO2 or particulate matter. 

The hydrogen fuel provides no externalities that can negatively impact public health or the environment, just inherently clean energy which is why it is considered by the public as the energy of the future. 

Relevant: 10 Best Green Energy Stocks To Invest In Now

Hydrogen can be used in fuel cells or internal combustion engines. The hydrogen fuel cells technology, in particular, is attracting increased attention not only from corporations but also – investors. 

Fuel cells technology is unique as it can be used in a variety of applications – from providing power for systems as large as a utility power station, to running a device as small as a laptop computer.

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Operating on the principle of combining hydrogen and oxygen to produce clean electricity, hydrogen fuel cells can power pretty much anything – trucks, cars, delivery vans, residential buildings, drones, airplanes, spaceships and even futuristic technologies like air caps.

It almost seems like we are already living in the future, as a growing number of companies are entering the energy market, developing the so-called hydrogen economy – the revolution transitioning the economy from fossil-fuel based to hydrogen, in an attempt to achieve a net zero world. 

Political Influence

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Billions of dollars from governments around the world are now tied up to funding the widespread development of the economy based on hydrogen fuel and other clean energy sources. In the US, climate change mitigation and green energy are at the forefront of Biden’s political agenda. 

Back in March 2021, President Joe Biden released the American Jobs Plan – a $2.25 trillion program that aims to jumpstart the US economy after the burdens posed by the COVID-19 pandemic. 

On July 28, Senate negotiators announced that a $1.2 trillion agreement for physical infrastructure had been reached instead. The Plan proposed $15 billion of investments in projects for climate R&D, including hydrogen and utility-scale energy storage. 

Also, separate 10-year spending plans, originally priced at $3.5 trillion, now scaled down to $2 trillion, were under heated discussion at the White House. The bills represent the biggest step made so far in tackling the climate crisis, including further investments in clean energy infrastructure. 

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They include the Bipartisan Infrastructure Law – signed into law in November 15, 2021, the CHIPS & Science Act (August 9, 2022), and Inflation Reduction Act (August 16, 2022). They have partially overlapping priorities and together they introduce $2 trillion in new federal spending over the next ten years including funding to clean energy.

The Inflation Reduction Act is one of the most critical government spendings for clean energy considered significant funding for climate efforts. It directs nearly $400 billion to green energy, with the goal of substantially lowering the nation’s carbon emissions by 2030. The funds will be delivered through a mix of tax incentives, grants, and loan guarantees.

They will go towards clean electricity and transmission, and clean transportation, including electric vehicle (EV) incentives. The act also includes the so-called 45V credit that allows up to $3 in tax credits per kilogram of qualified clean hydrogen produced. The introduction of the Inflation Reduction Act immediately boosted hydrogen stocks on expectations of a significant ramp-up of the technology.

In China, hydrogen is also in the headlines as it has been included as one of its “six industries of the future” in the 14th Five-Year Plan (2021-2025) that signals large investments in hydrogen innovation and development. 

China and the US are not alone. The governments of EU countries, Australia and Asia are supporting the deployment of hundreds of large-scale hydrogen projects. According to analyses, hydrogen can become the most competitive low-carbon solution in more than 20 applications by 2030, including long-haul trucking, steel, and shipping.

The developments regarding clean energy policies in the world’s wealthiest countries are affecting hydrogen companies and stocks. Investors will continue to keep an eye on the expansion of the hydrogen market that is tied at its beginning to political support. 

Hydrogen Market Growth

The global hydrogen generation market size was valued at $129.85 billion in 2021 and is expected to reach $225.73 billion in 2030. Global hydrogen production is also forecasted to rise from 71 million tons in 2020 to 168 million by 2030 and towards at least 300 million metric tons by 2050 under a base-case scenario. 

The forecasted exponential increase in the production of hydrogen is driven by the higher demand for clean and green fuels, coupled with the growing government regulations to control and curb greenhouse gases in electricity production and transportation.

As the largest part of hydrogen production falls on natural gas reforming, the price of hydrogen is connected to the price of natural gas. The process also incurs emissions if they are not handled with carbon capture and storage technologies.

There is another way to produce hydrogen that is 100% clean and leaves no harmful emissions – from the electrolysis of water. The process involves the use of renewable electricity to split water into hydrogen and oxygen. Hydrogen produced this way is called green hydrogen and is considered the holy grail of clean energy. 

However, it does have some pitfalls. According to analyses, using renewable energy to produce hydrogen and then burning it for electricity has a cycle efficiency of 40% which means for every 10kWh of renewable energy that would go for the production of hydrogen, 4kWh of electricity would be generated from burning that hydrogen.

Re-electrifying green hydrogen for now only makes sense if it is used as a backup power to renewables. According to researchers, it is feasible as a seasonal power storage and could be used in times when solar or wind energy sources are not producing. However, there are some innovations in green hydrogen production that could improve significantly its cycle efficiency and thus make the process viable for main electricity generation.

Relevant: New Discovery Finds More Efficient Water Electrolysis Process To Produce Hydrogen

A team of researchers from the National University of Singapore (NUS) has made an accidental scientific discovery that improves the efficiency of water electrolysis. By introducing more light to the process, potentially by transparent electrolyzers, the process is accelerated. That means less energy would be required to produce hydrogen which could potentially open up new industrial methodologies for producing the fuel.

There are more recent discoveries that could potentially revolutionize the hydrogen economy in the production and deployment stages, however, they are fairly recent and require more research, development, and scaling efforts.

Some other obstacles to the mass deployment of green hydrogen are also high cost and lack of developed infrastructure. According to analysts though, the cost is expected to fall from current levels between $6 – $8 to $1 per kg by 2050 without any government support. 

That would significantly affect its large-scale development and infrastructure spending. Policy intervention is supposed to accelerate this process even further, so the market could be eyeing green hydrogen at $1 as soon as 2030.

Plug Power Stock Forecast

Plug Power is one of the largest hydrogen fuel cell technology companies in the world with a market cap currently at $9 billion. The company wants to become a global leader in hydrogen production and supply, in particular, green hydrogen, and is currently developing hydrogen infrastructure to deliver on its plans. 

Back in February 2021, Plug announced it will build North America’s largest green hydrogen production facility announced to date which is expected to produce 45 metric tons daily of green liquid hydrogen servicing the Northeast region. 

However, the scale and number of green hydrogen mega projects continue to increase, as recently industrial gas supplier Air Products and power utility company AES Corp. announced plans to jointly spend $4 billion on a green hydrogen plant that will produce more than 220 tons per day.

Still, Plug Power’s future plans are to supply 500 tons per day of green hydrogen by 2025 and 1,000 tons per day globally by 2028. Its goal is to offer green hydrogen prices that are competitive with diesel. 

Plug has announced various partnerships and investment deals with other companies that are paving the way towards building the green hydrogen economy. That includes a $1.6 billion investment deal with SK Group resulting in the formation of a joint venture with the sole purpose to accelerate the use of hydrogen as an alternative energy source in Asian markets.

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The company plans to establish a gigafactory in Korea by 2023 to produce fuel cells and electrolyzers, and later provide them in broader Asian markets at a substantial cost reduction. Along with the several green hydrogen production facilities planned in locations across the US, the company is on the way to becoming a hydrogen market leader in regions like Asia and the US. 

The Plug Power green hydrogen stock is currently 90% lower at $15 from its IPO. Hydrogen stocks are under pressure now due to economic stagnation and worries over the rising costs of living. Some analyses though claim they have reached critical levels now and are prime to soar.

If you’d like a more detailed analysis of Plug Power and their prospects as of December 2022, check out our Hydrogen Industry and Stocks Report. You’ll find 85 pages of in-depth descriptions and analysis of the hydrogen industry as a whole, as well as five stock analyses. In these stock analyses we dissect the major developments around the stocks, their latest earnings and charts, and last but not least – a head-to-head comparison between the five stocks.

FuelCell Energy Stock Forecast

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FuelCell Energy Inc. is a company that designs, manufactures, and operates fuel cell power plants that work on natural gas or biogas. The company also manufactures green and blue hydrogen fuel cell systems for a wide variety of applications, as well as for capturing carbon from the fossil fuels sector. 

It has a joint agreement with oil major Exxon to work on carbon reduction technologies including carbon capture, to enhance Exxon‘s climate change efforts. 

Relevant: Exxon And FuelCell Energy Strike Second Agreement On Carbon Reduction Tech

FuelCell Energy is set to benefit materially from the recently passed Inflation Reduction Act and the $3 clean hydrogen production credit in particular, but investors are being warned of caution when it comes to purchasing this stock – it is downgraded as being of high risk of performing badly and 98% below its IPO price.

The company is still well-positioned to meet some of the opportunities coming with the acceleration of global energy transition, however, it still needs to catch up with competitors Plug Power and Ballard Power Systems which have much better revenue and growth projections. 

If you’d like a more detailed analysis of FuelCell and their prospects in 2023 and beyond, check out our Hydrogen Industry and Stocks Report. It has 85 pages of in-depth descriptions and analysis of the hydrogen industry as a whole, as well as five stock analyses. In these stock analyses we dissect the major developments around the stocks, their latest earnings and charts, and last but not least – a head-to-head comparison between the five stocks.

Bloom Energy Stock Forecast

Bloom Energy is a hydrogen fuel cell company that is offering on-site energy servers designed to provide uninterrupted power supply from renewable energy by using solid-oxide fuel cells to convert natural gas and hydrogen into electricity. The company has long-term clients like Alphabet, FedEx, Intel, Home Depot, The Wonderful Company, eBay, Apple, and Walmart.

The company announced on October 25th, 2021 a major deal with the South Korean-based SK Group’s affiliate SK ecoplant that basically set on fire the entire hydrogen market. Bloom struck a $4.5 billion deal with SK ecoplant that agreed to buy at least 500 megawatts of fuel cells from Bloom Energy. The estimated $4.5 in revenue is expected to come between 2022 and 2025.

The Bloom Energy stock skyrocketed 37% to $27.96 immediately after the release. Other hydrogen stocks were also boosted by the news – Plug Power rallied almost 7% to reach $34.97, FuelCell was up 3.43% and Ballard Power Systems jumped 5.37%. 

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The deal is undeniably a huge milestone for Bloom Energy. The order from SK ecoplant will significantly strengthen the balance sheet and help the company rapidly commercialize its hydrogen solutions. It could also make Bloom Energy profitable and cash-flow positive in the medium term – something investors have been waiting for over the last 20 years since the company exists. 

Major deals promoting the use of hydrogen fuel in the US or Asia are expected to be positive for the companies in the sector. 

On the technical side, Bloom Energy stock bounced from the $16 support zone and is now sitting comfortably around $25. August highs at $29-30 could be the next target. The stock has been upgraded recently as a buy which is boosting optimism from investors.

If you’d like a more detailed analysis of Bloom Energy and their prospects in 2023 and beyond, check out our Hydrogen Industry and Stocks Report. The first half of the report is a deep dive into the current state of affairs of the hydrogen industry, while the second has 10 pages dedicated to each of the five stocks we’ve selected. The cherry on top is a head-to-head comparison between the five stocks.

Relevant: Bloom Energy Riding The Future Of The Hydrogen Economy

Ballard Power Systems Stock Forecast

Ballard Power Systems Inc. is a supplier and manufacturer of fuel cell products for markets like heavy-duty vehicles, portable power, and material handling. The company has designed and shipped over 400 MW of fuel cell products to date. Its market cap is currently at $1.7 billion and the share price stays around $6. 

Ballard’s key market is China, accounting for more than half of its total revenue. The company also sells fuel cells for material handling applications to Plug Power – one of its major competitors. 

Ballard’s last Q3 2022 earnings announced in November showed a revenue of $21.3 million, which was missed by $2.64 million and was down 15.5% on a Y/Y basis.

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The cash reserves came at $950 million and the company’s cash use was higher than in most quarters at $45.8 million, but that didn’t seem to bother investors. The revenue and margins could continue to decrease in the foreseeable future as Plug Power is shifting towards a lower-margin product and services for Ballard – the heavy-duty segment and away from the material handling market.

Back in 2020, Ballard welcomed with excitement the China government’s new official policy regarding Fuel Cell Electric Vehicles. The country aims to achieve 1 million FCEVs on the road by 2030 which is expected to support their adoption.

Currently, Ballard Power Systems stock is down 53% year to date (as of December 2022) and is rated as hold by analysts. The whole hydrogen sector was boosted by President Joe Biden’s announcements of climate change focus and investments. The recent deal made by Bloom Energy also gave a boost to the stock, however, investors will be looking for more solid fundamentals to indicate future growth, so that they can place larger bets on the company. 

If you’d like a more detailed analysis of Ballard and their prospects in 2023 and beyond, check out our Hydrogen Industry and Stocks Report.

Nikola Stock Forecast

Nikola Corporation is a manufacturer of heavy-duty commercial battery-electric vehicles, fuel-cell EVs, and cutting-edge energy solutions. The company first became public in early 2020 and it now plans to manufacture hydrogen-electric trucks to answer the demand from European customers.

The company’s last earnings results released in November 2022 showed a GAAP net loss per share at $0.54, and a non-GAAP net loss per share at $0.28. The continued net loss is spooking markets, as they come to the realization the company is burning a lot of cash to stay afloat and still no profits are on the horizon soon enough. The company’s options to raise cash to cover quarterly expenses are limited so it is faced with the threat of bankruptcy.

Back in 2020, it was accused by Hindenburg Research that the prototype of one of the company’s trucks is not driving itself up to a cliff but actually rolling down an incline. A SEC investigation followed suit that saw Nikola’s founder Trevor Milton convicted guilty of charges of fraud. His sentencing has been scheduled for January 27th, 2023 and he faces up to 20 years in prison.

On the bullish side, Nikola keeps announcing an array of partnerships that signal an expansion of its business and impact on the hydrogen sector. Back in October 2021, Nikola signed an agreement with TC Energy Corporation (TSX, NYSE: TRP) – a leading North American energy infrastructure company to join forces on co-developing, constructing, and operating large-scale hydrogen production facilities (hubs) in the US and Canada.

The company announced in December 2022 it will be working with E.ON to develop a package for hydrogen-powered heavy-duty transport. It keeps getting orders from clients for its zero-emissions fleet, including a recent purchase order for 100 Nikola Class 8 Tre battery-electric trucks from Zeem Solutions.

All in all, the demand for its products is growing and the main issue stays the lack of profitability and cash on its hands. The stock is currently rated hold by analysts due to the high risks it involves.

If you need more information about Nikola’s prospects in 2023 and beyond, check out our Hydrogen Industry and Stocks Report.

Relevant: Nikola Stock Forecast Boosted By TC Energy Agreement

Conclusion

What are the best hydrogen stocks, has been a hot topic lately as the hydrogen economy is expected to keep growing in the next decade. Costs for hydrogen and green hydrogen are falling along with the international market expansion which means those 5 hydrogen companies mentioned above could be generating large returns for investors in the years to come.

Risk Disclaimer

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Carbon Herald). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock, you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.

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