Stocks to buy

3 Hot Hydrogen Stocks to Buy in September

Today I will discuss hydrogen stocks that could do well in the final months of 2022. Many nations are taking steps to achieve net-zero carbon emissions,  putting alternative energy shares in the limelight and providing positive catalysts for hydrogen stocks as well.

According to the U. S. Department of Energy, “Once produced, hydrogen generates electrical power in a fuel cell, emitting only water vapor and warm air. It holds promise for growth in both the stationary and transportation energy sectors.”

Recent metrics suggest that in 2021, the global hydrogen generation market reached almost $130 billion. Between 2022 and 2030, the market is forecast to expand at a compound annual growth rate (CAGR) of close to 6.5%. As a result of the sector’s growth outlook, Wall Street pays attention to hydrogen stocks.

Yet the current bear market, which has hit growth shares especially hard, has also put pressure in hydrogen stocks. Since most of these companies are not profitable, investors regard them as risky investments while macroeconomic uncertainties persist.

Here are three hydrogen stocks that will enable investors to participate in the growth of this alternative-energy source.

FCEL FuelCell $3.93
HYDR Global X Hydrogen ETF $14.09
LIN Linde $277.14

Fuelcell Energy (FCEL)

Source: Kaca Skokanova/Shutterstock

Hydrogen fuel cell specialist Fuelcell Energy (NASDAQ:FCEL) has been a controversial hydrogen stock that Wall Street watches closely. The bear camp highlights the firm’s  poor earnings over many quarters, its share dilution, and the high levels of cash burn that have dampened investors’ sentiment towards it.

The bull camp is, however, encouraged by the size of Fuelcell’s addressable market. Recent market research suggests that, by 2028, the global fuel cell market should reach close to $12 billion. Such an expansion would equate to a compound annual growth rate (CAGR) of over 19% between 2022 and 2028.

Fuelcell Energy unveiled its second-quarter numbers in early June. Its revenue came in at $16.4 million compared to $14.0 million during the same period a year earlier. It reported a loss per share of 8 cents, versus a loss per share of 6 cents in Q2.

Although investors were not pleased with the metrics, they noted the backlog of $1.33 billion as of Apr. 30. The company also agreed to keep developing a carbon capture solution with Exxon Mobil (NYSE:XOM).

So far in 2022, FCEL stock has lost over 15% of its value. Its shares are changing hands at 17. times its sales. Analysts’ average 12-month price target for Fuelcell Energy is $5.

Global X Hydrogen ETF (HYDR)

Source: Shutterstock

Next up is an exchange-traded fund (ETF), namely the Global X Hydrogen ETF (NASDAQ:HYDR). It gives investors exposure to 25 global companies in the hydrogen sector.

HYDR began trading in July 2021, and its net assets stand at $43.5 billion. Around 40% of the companies whose stocks it holds come from the U.S. Others are based in Norway, the U.K., Canada, and Sweden.

Ten stocks constitute over 70% of the assets held by the fund. Among the latter names are fuel cell makers Bloom Energy (NYSE:BE), Plug Power (NASDAQ:PLUG), and Ballard Power (NASDAQ:BLDP); alternative energy equipment company Nel ASA (OTCMKTS:NLLSF) and Fuelcell Energy.

HYDR has lost over a third of its value since January. Potential investors in the hydrogen space could find value in the fund at its current levels.

Linde (LIN)

Source: Shutterstock

Global industrial gas heavyweight Linde (NYSE:LIN) is our final stock. Its customers come from a wide range of industries, such as chemicals, energy, food, healthcare, electronics, semiconductors, and mining. The stock is dual-listed, with its shares trading on both on the New York Stock Exchange (NYSE) and the Frankfurt Stock Exchange in Germany. 

The gas giant released its second-quarter financial results in late July. Its revenue increased 12% year-over-year (YOY) to $8.5 billion. Its EPS, excluding certain items, came in $3.10, up 15% from the same period a year earlier. Linde’s reported free cash flow of $1.3 billion.

In late August, Linde announced that “it has inaugurated the world’s first hydrogen refueling system for passenger trains in Bremervörde, Germany… The new hydrogen trains will replace existing diesel-powered trains.” As countries look for alternative energy sources as part of their efforts to rely less on oil, this recent development caught investors’ attention.

LIN stock is down about 16% this year and offers a dividend yield of 1.6%. The shares are trading at 25.1 times the company’s forward earnings and 4.6 times its sales. Analysts’ 12-month average price forecast for Linde stands at $355.

On the date of publication, Tezcan Gecgil,Ph.D., 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 Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

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