Energetic Investments: 3 Prime Hydrogen Stocks Poised for Growth

Stocks to buy

Hydrogen is positioned to play a fundamental role in the global energy transition. It provides a pathway for decarbonizing “hard-to-electrify” sectors such as aviation, shipping, and heavy industry, where battery alternatives remain impractical.

Fuel cell markets directly linked to hydrogen adoption are rapidly expanding. According to Mordor Intelligence, the global fuel cell market, valued at $5.4 billion, could reach over $22 billion by 2028. The world aims to reach net zero emission goals. Therefore, interest and investment in clean hydrogen have accelerated. Let’s examine the top three hydrogen stocks investors may want to add to their portfolios.

Air Products and Chemicals, Inc. (APD)

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

Source: Andy Borysowski / Shutterstock.com

Pennsylvania-based Air Products and Chemicals, Inc. (NYSE:APD) is a global gas company that’s 83 years old and has an enterprise value of $69.28 billion. Air Products and Chemicals provide industrial gasses (including hydrogen), equipment, and expertise in refining, chemicals, metals, and more.

Also, the company is leading in liquefied natural gas technology and equipment. They operate large industrial gas projects, such as converting natural resources into synthetic gas, fuels, and chemicals. 

Recently, APD announced hitting a significant milestone, with 2000 sea vessels now operating its nitrogen generation systems. This achievement highlights the company’s role in providing eco-friendly maritime technologies that benefit worldwide shipping operations. Also, Air Products and Chemicals is one of three companies behind the largest hydrogen-based production facility worldwide. 

In fact, APD reported solid growth in the fiscal Q4 of 2023. GAAP EPS increased 20% year over year (YOY) to $3.08. Meanwhile, adjusted EBITDA was up 10% to 1.3 billion, and margins increased 39.5% YOY due to higher pricing.

However, total sales declined 11% to $3.2 billion, mainly due to lower energy cost pass-throughs. Even so, the company’s overall performance is strong. Analysts rate APD a strong buy with a high price target of $365, representing around 34% upside potential from its recent trading price. These factors signify potential gains for long-term investors.

Linde PLC (LIN)

Logo of Linde AG (LIN) in Hanover, Germany - The Linde Group is a multinational chemical company

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Linde PLC (NASDAQ:LIN) is a global gas company formed in 2018 from the merger of Linde AG and Praxair. Today, Linde PLC is valued at over $211 billion and is headquartered in the U.K.

Also, the company is one of the world’s largest suppliers of industrial gasses, including hydrogen, oxygen, nitrogen, and helium. Linde PLC is investing in hydrogen as a clean fuel for vehicles. Its production facilities are powered by wind energy that converts water into hydrogen. 

Recently, the company secured long-term agreements to supply industrial gasses to Indian Oil Corporation’s Panipat refinery. This agreement further improves Linde PLC’s market presence and contributes to increased revenue streams.

LIN reported solid third-quarter results. Net income was $1.565 billion, up 23% YOY. Adjusted EPS was $3.63, also up – 17%. However, sales were down 7%, but underlying sales grew 3% from price increases.

The companies’ adjusted operating profit margin expanded significantly to 28.3%, while the operating cash flow was $2.5 billion. Additionally, LIN returned $1.774 billion to shareholders through dividends and buybacks. CEO Sanjiv Lamba said results were driven by operational excellence and high-return investments. On top of that, 20 analysts rated LIN a strong buy.

Bloom Energy Corporation (BE)

BE stock Bloom Energy logo on a building

Source: Sundry Photography / Shutterstock

California-based Bloom Energy Corporation (NYSE:BE) was founded almost 23 years ago. It is now a leading provider of clean energy solutions with an enterprise valuation of $4 billion. The company specializes in manufacturing solid-oxide fuel cells. BE enables businesses worldwide to produce reliable electricity and hydrogen on-site with lower emissions.

Recently, the company installed the first phase of a 10-megawatt solid-oxide fuel cell in Taiwan. This milestone improves the company’s market presence and increases demand for clean and reliable power solutions.

Bloom Energy Corporation reported a revenue of $400.3 million in the third quarter, a 37% increase YOY. Non-GAAP gross margin improved significantly to 31.6%. Also, the company posted an operating loss of $103.7 million compared to $52.6 million YOY.

Despite that, BE managed to exceed EPS estimates by 129.41%. Analysts remain optimistic with their buy rating. And the $32 highest price target represents a near 125% upside potential from its current price.

On the date of publication, Rick Orford 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.

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