There is a strong case for wider adoption of hydrogen as the world pushes for clean energy. The International Energy Agency estimates that the cost of producing hydrogen from renewable electricity could fall 30% by 2030. This factor alone is a big trigger for scaling up the hydrogen economy. With some bullish estimates on growth, it’s a good time to accumulate some of the best hydrogen stocks.
To put things into perspective, the global hydrogen market is expected to reach $317.39 billion by 2030. Some of the early movers in the industry will be best positioned to gain. Investors need to be selective as the big market potential has resulted in several players entering the hydrogen business.
This column focuses on three companies that are positioned to make it big in the coming years. Further, these represent millionaire maker hydrogen stocks likely to deliver multibagger returns.
Let’s discuss the reasons to be bullish.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) stock has corrected by 25% in the last 12 months. Fresh accumulation can be considered before the next rally commences on the back of ambitious growth plans.
As an overview, Plug Power claims to be building an end-to-end hydrogen ecosystem. If the company’s ambitious plans are executed, the stock is poised to be a multi-bagger.
To put things into perspective, Plug Power expects revenue of $1.2 to $1.4 billion for 2023. The company has guided to boost revenue to $5 billion by 2025 with an operating margin of 17%. Revenue is further expected to increase to $20 billion by 2030 with an operating margin of 20%. If this target is achieved, I believe that PLUG stock can be 10x or 15x in the next five to seven years.
Of course, to achieve this target, Plug Power would need to dilute equity. I however don’t see that as a concern if the company’s plans remain on track in terms of timely execution.
Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) is among the best hydrogen stocks to consider at current levels. The stock looks attractive at a forward price-earnings ratio of 26.5 and offers a robust dividend yield of 2.3%.
A major reason to like Air Products is the company’s high financial flexibility. In the last 12 months, the company reported a distributable cash flow of $3.2 billion. Post dividends, the company’s investible cash flow stands at $1.7 billion. It’s not surprising that Air Products has planned some big investments in the hydrogen business.
As an example, the company will be investing $4.5 billion to build-own-operate the world’s largest blue hydrogen production facility. This asset will be operational by 2026. The company has also created a joint venture in Saudi Arabia, NEOM Green Hydrogen Company. This JV closed an investment of $8.4 billion this year for the world’s largest green hydrogen facility.
The key point is that Air Products is positioned to make some big investments in the next few years. This will help the company emerge as one of the leading hydrogen companies globally.
Bloom Energy (BE)
Bloom Energy (NYSE:BE) is another attractive name among millionaire-maker hydrogen stocks to buy. BE stock has been largely sideways in the last 12 months and a breakout on the upside seems imminent.
RBC recently initiated a “buy” rating on the stock with a target price of $24. This would imply an upside potential of 34% from current levels. Of course, over a time horizon of five years, multi-bagger returns seem likely.
A potential game changer for the company is its solid oxide hydrogen fuel cell technology. The fuel cell has already been deployed in 100s of applications across industries. This includes healthcare, data centers, critical manufacturing, retailers, among others. The addressable market is therefore significant and I expect the company to benefit.
An important point to note is that the company expects to commercialize its solid oxide electrolyzer for large projects in 2024 and beyond. This is likely to support accelerated revenue growth.
On the date of publication, Faisal Humayun did not hold (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.
