With lithium and its ability to undergird the electric vehicle market dominating business headlines throughout the post-pandemic new normal, it’s easy to overlook the case for high-potential hydrogen stocks. However, for contrarians willing to stick their neck out in this risky sector, there may also be intense value to be unlocked.
First, the top hydrogen stocks to buy benefit from long-term relevance. According to Grand View Research, the global hydrogen generation market reached a valuation of $155.35 billion last year. Further, the segment should rise at a compound annual growth rate (CAGR) of 9.3% from 2023 to 2030. At the culmination of the forecast period, revenue should clock in at $317.39 billion.
Second and on a more cynical note, the EV sector isn’t doing too well. Indeed, demand has fallen off so much that it’s impacting demand for lithium, thus imposing challenges throughout the value chain. Subsequently, hydrogen players may be able to steal some of the investor dollars earmarked for speculation.
To be clear, the risks are significant. However, if you can handle the heat, below are the hydrogen stocks to consider.
Linde (LIN)
To be completely straightforward, I’m pushing creative liberties to the max when I call Linde (NASDAQ:LIN) one of the high-potential hydrogen stocks to buy. How so? According to TipRanks, the current analyst consensus comes in at a unanimous strong buy. That’s great but the average price target sits at $436, implying 12% upside. To be sure, that’s not a terrible outcome, especially with the added-on forward yield.
Still, I’m sure you’re looking for robust return potential and I’ll give you that soon enough. However, when it comes to confidence boosters, LIN easily ranks among the top hydrogen stocks. Late last month, the hydrogen producer impressed investors with its margin expansion, managing to overshadow the firm’s slight revenue miss. Considering that profitability will likely take precedence ahead of possible market uncertainty, you’ll want to at least consider LIN.
Another reason to put Linde on your watch list centers on options market dynamics; particularly, options flow or big block trades likely filled by institutional investors. Following earnings, a trader (or traders) acquired 669 contracts of a near-expiry call option. So, the big dogs are paying attention.
Bloom Energy (BE)
Moving onto the high-risk, high-reward category of top hydrogen stocks to buy, Bloom Energy (NYSE:BE) offers plenty of punch for investors willing to handle the heat. Presently, BE stock carries a strong buy consensus view among covering analysts. In addition, the average price target lands at $18.80, projecting growth of over 89%. Even better, the high-side target is $24, implying nearly 142% upside potential.
So, what’s the catch? Well, it’s risky – as in so risky that it deserves a “qualifying” term ahead of the word. It starts with an “F” in case you’re wondering. Since the start of the year, BE lost more than 48% of equity value. However, it might be worth it for speculators as the underlying business offers myriad relevancies. For example, its solid oxide fuel cells produce on-site electricity for grid resilience.
Also, BE attracts institutional traders in the options market, making it an enticing idea for hydrogen stocks. Per data from Fintel, since late October, major entities have been buying large volume of calls at the $17 strike price. Also, they’ve been selling $8 puts, implying a technical floor at that price.
Plug Power (PLUG)
Another risky enterprise among the top hydrogen stocks to buy for extreme reward potential, Plug Power (NASDAQ:PLUG) isn’t for the faint of heart. Nevertheless, if you bid on it and the stars happen to align, it may do very well for you. Presently, analysts rate PLUG as a consensus moderate buy. Overall, the average price target lands at $15.20, projecting 144% growth.
And if you really want to have your mind blown, the maximum target stands at $37. That translates to upside of nearly 494%. So yeah, if you’re looking for high-potential hydrogen stocks, you’re not going to do much better than PLUG. That said, you can’t cry about the heavy risks involved. Although the hydrogen fuel cell systems developer offers much relevance, shares slipped 49% since the January opener.
Now, what draws some intrigue is rumblings in the derivatives market. Looking at Fintel’s options flow screener, since early this month, institutional investors have demonstrated interest in selling (writing) put options at strike prices between $5 and $6. That implies a bottom in this range since under exercise, the put writers must buy PLUG at the strike prices.
On the date of publication, Josh Enomoto 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.
