Hydrogen stocks hold a lot of promise currently. The world is undergoing an energy transition that is centered on limiting global warming and overall emissions. Hydrogen is particularly important in that fight as it doesn’t release carbon dioxide when it is combusted. Carbon dioxide emissions are among the chief greenhouse gases that raise the earth’s temperature. This has led to the rise of the top 3 hydrogen stocks for investors.
It is thought that switching to hydrogen as a fuel source can greatly reduce emissions and preserve the planet’s health. Firms that produce hydrogen and related technologies are therefore of great interest to investors. The forecast growth in the market is impressive with reports suggesting 67% annual growth between 2022 and 2027.
Here are the top 3 hydrogen stocks to consider.
Bloom Energy (BE)
Bloom Energy (NYSE:BE) is a hydrogen stock for the purist. The company is young, growing quickly, and offers a unique platform for the generation of hydrogen and electricity.
Bloom Energy’s Bloom Energy Server converts low-pressure natural gas or biogas into electricity and hydrogen. It is certainly among the more promising green energy stocks for investors to consider.
What is particularly interesting from a fundamental standpoint is the firm’s growth. Bloom Energy revenues increased from $133.54 million to $193.75 million during the three months ended March 31. That 37% growth makes Bloom Energy undeniably interesting and provides a strong argument for the notion that the hydrogen economy is well on its way. Equally importantly, Bloom Energy’s losses declined by nearly $8 million during the same period.
Those strong fundamentals perhaps contributed to RBC Capital’s recent initiation of coverage and $24 target price. That target price is largely in line with that which other analysts have assigned BE stock which currently trades below $18.
BP (BP)
BP (NYSE:BP) is a London-based firm and oil stock also known as British Petroleum. Oil firms in Europe are known for their greener stance and have generally invested more heavily in carbon reduction than their U.S. counterparts.
What that means for investors is that BP offers exposure to hydrogen growth opportunities with the benefits of a major oil stock. You’re not going to receive the massive upside exposure of Bloom Energy but you will receive income in the form of a dividend yielding over 4% currently.
BP is aiming to become a net zero firm by 2050 or earlier and n order to do so it is leveraging hydrogen. In its domestic market, BP plans to provide 10% of U.K. hydrogen by 2030. Planning for its H2Teesside plant is underway and should result in 1 gigawatt (GW) of production by that time. 1 GW is enough to power roughly 800,000 homes for a year. The firm’s other hydrogen projects span Europe, Australia, and the U.S.
Air Products & Chemicals (APD)
Air Products & Chemicals (NYSE:APD) is another stable firm and stock with a significant presence in hydrogen. The company’s stability is exemplified in its dividend which hasn’t been reduced since 1983.
The company is heavily involved in hydrogen and boasts more than 100 plants globally. In fact, Air Products & Chemicals is the world’s largest hydrogen producer with operations spanning the value chain. It also operates more than 250 fueling stations in 20 countries.
As the company’s website notes, hydrogen has applications in automobiles, buses, trains, ships, and power generation. Air Products & Chemicals is partnering with World Energy for a $2 billion expansion of the latter’s Sustainable Aviation Fuel (SAF) production and distribution hub in Paramount, California. Air Products & Chemicals will build, own, and operate the project and will also expand its pipeline in the process.
Share prices have been steadily increasing but the good news is that APD traded quite a bit higher earlier this year. That suggests that there’s plenty of upside remaining. It remains a strong choice for investors who believe in the growth story surrounding the hydrogen opportunity and seek stability. This puts it firmly in the category of the top 3 hydrogen stocks.
On the date of publication, Alex Sirois 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.
