HJEN - Green Hydrogen: 3 Hydrogen Stocks to Buy and Hold for Decades

2023-06-16 07:30:17 ET

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

As investors think about an all-of-the-above approach to renewable energy, it’s time for hydrogen to enter the conversation. More specifically, it may be time to look at green hydrogen stocks .

Green hydrogen is truly clean energy because it uses only water as the means of producing electricity. Other forms of hydrogen, notably grey and blue hydrogen, still use fossil fuels in some capacity. That makes green hydrogen a favorite of the U.S. government, which is investing in reversing climate change at levels never seen before.

Green hydrogen development is a $9.5 billion line item in the 2022 Inflation Reduction Act. Not only that, but green hydrogen producers are slated to get a 10-year tax credit of up to $3 per kilogram.

Catalysts like this are why analysts at Raymond James are forecasting global hydrogen demand to reach 118 million metric tons by 2030. For comparison, that demand was 94 million metric tons in 2021. And about 10% of that will come from green hydrogen. If that forecast comes to pass, it would mean that the growth in this sector is just getting started.

Put this together and you can see why it makes sense to look for long-term hydrogen stocks . Here are three green hydrogen stocks that you can buy at a low price today ands see impressive portfolio gains over the coming decades.

Plug Power (PLUG)

In terms of green hydrogen, there isn’t a much better pure-play than Plug Power (NASDAQ: PLUG ). The company is ‘the leader in building an end-to-end green hydrogen ecosystem that addresses every step of operations.” Plug Power supports applications in E-mobility (e.g. fleet trucking), material handling, and stationary power, which includes EV charging and data centers.

The company has locked in several key wins since the Inflation Reduction Act passed through Congress. And far from being confined to the U.S., Plug Power continues to win contracts in Europe, which still has a significant lead over the U.S. in terms of its hydrogen infrastructure. Investors are seeing those results in the company’s revenue, which continues to climb on a sequential and year-over-year basis.

The bottom line is a different story. But it’s one that some analysts believe may turn around as soon as this year or at latest 2024. Nevertheless, if you’re looking for green hydrogen stocks to buy as long-term investments, PLUG stock looks attractive at just over $10 per share.

Bloom Energy (BE)

Bloom Energy (NYSE: BE ) is not a pure play on green hydrogen. The company also offers grey hydrogen applications. But as part of its Bloom 2.Zero initiative , the company offers electrolyzers which offer “clean, carbon-free fuel for power generation, injection into the natural gas pipeline, transportation, or for use in industrial processes.” A compelling point about these electrolyzers is that they generate a portion of their power from “excess heat and energy,” including some that may come from solar power.

Like Plug Power, Bloom Energy is benefiting from the Inflation Reduction Act, and the company has seen a significant increase in revenue whether you measure it on a quarterly or year-over-year basis. Now, this is a company that’s not profitable. Nevertheless, analysts are foreseeing that it may profitable by the end of 2023.

Another way to view the opportunity that hydrogen represents is by looking at whether institutional investors are buying the company’s stock. Currently, BE stock has 79% institutional ownership, and in eight of the past nine quarters, buyers have outnumbered sellers, frequently by a large margin.

Direxion Hydrogen ETF (HJEN)

If you’re a fan of buying what you know, buying green hydrogen stocks may be a bit intimidating. That’s a good reason to invest in an ETF with a focus on the hydrogen sector. And one of the leading ETFs in the sector is the Direxion Hydrogen ETF (NYSEARCA: HJEN ). You’ll get exposure to stocks like Plug Power and Bloom Energy, with broader exposure that can lower your risk.

In addition to providing diversification by company, the Direxion Hydrogen ETF also provides exposure across countries. As of June 14, 2023, approximately 35% of the fund is composed of U.S.-based companies, but the rest of the fund is balanced across the globe.

As of June 2023, the fund had $32.85 billion under management and an attractive expense ratio of 0.45%. The fund also pays a modest dividend, with a yield as of writing at 1.22%.

On the date of publication, Chris Markoch 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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