There’s substantial opportunity in knowing which hydrogen stocks to buy. Unfortunately, two roadblocks need to be removed before the industry, and related stocks push higher. For one, we’re still waiting to see what happens with the restrictive 45V hydrogen tax credits. Remember, as I noted on May 3, Ernest Moniz, a former energy secretary, “said recently that the guidance presented by the IRS was too narrow and could slow the industry’s growth if not changed.”
Two, President Joe Biden’s administration faces a transport issue. At the moment, there’s a severe lack of regulations to transport hydrogen, which slows progress even further. As it stands now, “no federal agency has authority to issue permits for interstate clean hydrogen pipelines. Many states also don’t have rules outlining who can issue permits for moving hydrogen within their borders,” says E&E News.
However, while we wait for progress, we can use excessive pessimism as an opportunity, as Sir John Templeton would often say.
Linde (LIN)
Just a few days ago, I noted, “At $432.42, Linde (NASDAQ:LIN) is an oversold bargain. In addition, analysts at Mizuho raised its price target on LIN to $512, with a buy rating. BMO Capital also raised its price target to $510 a share.” Shortly after, LIN would rally to $437.52.
From here, I’d still like to see it initially refill its bearish gap at around $445. Better, while we wait, we can collect its yield of 1.28%. Most recently, LIN declared a quarterly dividend of $1.39, payable on June 18 to shareholders of record as of June 4.
Plus, as noted by CNBC, “We’re seizing on the weakness in Linde’s stock Thursday. Nothing in the report, including the subdued guidance, shakes our belief that this is among the high-quality companies around.”
Helping this sentiment, about seven analysts have a buy rating on the LIN stock, with an average price target of $492.30, representing a potential upside of about 13% and making it very competitive among hydrogen stocks to buy.
Air Products and Chemicals (APD)
The last time I mentioned Air Products and Chemicals (NYSE:APD) was about a week ago.
At the time, I said, “I’d like to see APD refill its bearish gap around $260 initially. From there, it could easily test $272 as the hydrogen story gains momentum. Plus, as we wait for the stock to recover more lost ground, we can collect its dividend of $1.77.”
It traded at around $230 then. Today, it’s up to $264.46 and it’s still cheap. It also just refilled its bearish gap. From here, I’d like to see it test $270 next.
With a yield of 2.75%, a good number of analysts are also bullish on the stock. Bank of America, for example, just raised its price target to $275 from $272, with a buy rating. BMO Capital raised its price target to $263 with an outperform rating. And TD Cowen just raised its target on APD to $320, with a buy rating as well.
Plug Power (PLUG)
The last time I mentioned Plug Power (NASDAQ:PLUG) was on May 3.
At the time, I said the stock was no longer a “going concern,” adding that it was seeing substantial advancements with its plants in Georgia and Tennessee.
Shortly after, PLUG would nail a high of $4.89. Now at $3.25, PLUG still looks like a solid bet. All thanks to a recent $1.66 billion commitment for a loan guarantee from the U.S. Department of Energy.
Still, one of the top hydrogen stocks to buy, Plug Power also just struck a deal with Allied Green Ammonia in Australia.
According to CEO Andy Marsh, “Moving this major green hydrogen-to-ammonia project to the BEDP phase is a sign of its maturity in the development process […] In total, we now have 7.5 GW of BEDP contracts globally to support our growth targets,” as noted by Investorplace contributor William White.
From its current price of $3.25, I’d like to see PLUG initially retest $4.89 again shortly.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
