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 alternative fuels that could drive the economy.
- Benefits of Hydrogen
- Political Influence
- Hydrogen Market Growth
- Plug Power Stock Forecast
- FuelCell Energy Stock Forecast
- Bloom Energy Stock Forecast
- Ballard Power Systems Stock Forecast
- Nikola Stock Forecast
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 many the energy of the future.
The hydrogen fuel can be used in fuel cells or internal combustion engines. The hydrogen fuel cells technology, in particular, is attracting increased attention not only from companies but also from 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.
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, 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.
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 investments in projects for climate R&D, including hydrogen and utility-scale energy storage.
Also, a separate 10-year spending plan, originally priced at $3.5 trillion, now scaled down to potentially $2 trillion or lower, is under heated discussion at the White House. The bill marks the biggest step made so far in tackling the climate crisis, including further investments in clean energy infrastructure.
If both bills get approved by policymakers, that could substantially boost hydrogen fuel cell stocks as it would be a sign that America is taking bold steps towards transitioning to clean energy. If the plans keep getting scaled-down and do not receive the necessary Senate support, that could be a major drag on the expansion of hydrogen infrastructure over the next couple of years.
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 a recent report, 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 significantly affecting hydrogen companies and hydrogen fuel stocks. Investors will continue to keep an eye on the expansion of the hydrogen market that is tied with its political support.
Hydrogen Market Growth
The global hydrogen generation market size was valued at $120.77 billion in 2020 and is expected to reach $420 billion in 2030. Global hydrogen production is also forecasted to rise from its current 71 million tons to 168 million by 2030 and towards at least 300 million metric tons by 2050 under a base case scenario.
This exponential increase in the demand for hydrogen fuel 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 bigger part of hydrogen production currently is taken by production from 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, though, to produce hydrogen – from the electrolysis of water, a process that is 100% clean and leaves no harmful emissions. The hydrogen produced this way is called green hydrogen and is considered the holy grail of clean energy.
Green hydrogen does offer some obstacles to mass deployment right now like high cost and lack of developed infrastructure. However, according to analysts, 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. 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 biggest hydrogen fuel cell technology companies in the world with a market cap currently at $20.03 billion. The company plans to be a global leader in hydrogen production and supply, in particular, green hydrogen, and is currently building hydrogen infrastructure to deliver on its plans.
Back in February this year, Plug announced it will build North America’s largest green hydrogen production facility that is expected to produce 45 metric tons daily of green liquid hydrogen servicing the Northeast region.
The company’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 its transportation fuel customers prices that are competitive to 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.
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 8,42% higher YTD at $34.88. It is recovering from May and September 2021 lows around $20, heading towards 2021 highs around $75. The next level target lies around $45 as the hydrogen stocks are boosted right now by an increasing number of expansion deals in the sector.
FuelCell Energy Stock Forecast
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.
The fuel cell technology company also pleasantly surprised investors by its latest Q3 earnings results when it reported a narrower-than-expected loss and revenue that rose well above expectations. The revenue rose 43.2% to $26.8 million from $18.7 million previously and the net loss was $12.8 million, or -$0.04 per share, from $16.1 million, or -$0.07 a share, in the same period a year ago.
The company is 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 that have even better revenue and growth projections.
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 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%.
The deal is undeniably a huge milestone for Bloom Energy. The company only generated $794.2 million in revenue last year and the latest forecast for 2021 says it will hit revenue between $950 million and $1 billion.
The order from SK ecoplant will significantly strengthen the balance sheet and help the company to rapidly commercialize its hydrogen solutions. It could also make Bloom Energy finally turn profitable and cash-flow positive – something investors have been waiting for over the last 20 years since the company exists.
Any major deal like this one that helps promote the use of hydrogen fuel in the US – or in Asia, is expected to be positive for all companies in the sector.
On the technical side, Bloom Energy stock reached the $19 – $12.50 zone of support and then rebounded, as previously forecasted from us in our Bloom Energy stock analysis. Right now it seems like $37 – $43 would be the next target – right around February highs.
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 $4.91 billion and the share price stays at $16.47.
Ballard’s key market is China as it accounted for more than half of its total revenue last year. The company also sells fuel cells for material handling applications to Plug Power – one of its major competitors.
Ballard’s last Q2 earnings announced in August showed a mixed picture – it reported a third consecutive quarter with a falling revenue YoY but strong cash reserves. The drop of 3% in revenue was due to lower sales in China and a drop in sales to Plug Power.
The cash reserves came at a substantial $1.24 billion – an amount that could cover the company’s operating expenses for the next several years, however, it is certainly not a sustainable business model.
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. The company is also expecting further clarity on the hydrogen regulations in China.
Ballard Power stock is down 26.9% year to date and -60% since its February high when 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, to be able to place larger bets on the company.
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 now it plans to manufacture hydrogen-electric trucks to answer the demand from European customers.
The company’s last earnings results released in August showed a widened net loss even though it was narrower than analysts predicted. EPS came at 20 cents from 14 cents in Q1, but still better than the 30-cent loss expected.
Nikola has no sales yet as it doesn’t have a commercial product. It was even 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 about the company potentially misleading investors, which is still undergoing.
During the earnings release, Nikola announced it now expects to deliver 25-50 electric vehicles in 2021, which is down from an earlier view for 50-100. It also lowered revenue guidance to $0-$7.5 million from $15 -$30 million previously.
On the bullish side, Nikola announced in October 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. Nikola stock rose around 10% following the news and is expected to reach the $14 – $15 resistance area in the short term.
What are the best hydrogen stocks has been a hot topic over the past year as the hydrogen economy is expected to keep growing in the next few decades. Costs for hydrogen and green hydrogen are falling along with the international market expansion which means those 5 hydrogen companies mentioned above are likely to generate large returns for investors in the years to come.
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.