Crisis will lead to opportunity for hydrogen stocks.
Unfortunately, the industry is still waiting to see what will happen with the current, restrictive 45v tax credits, which could save companies up to $3 per kilogram of production if companies can meet what many are calling tough new standards.
Right now, as noted by Barron’s, “Ernest Moniz, a former energy secretary, heads the consortium formed to organize a market for clean hydrogen, called the Hydrogen Demand Initiative. Moniz said recently that the guidance presented by the IRS was too narrow and could slow the industry’s growth if not changed.”
While we wait for hopeful changes, there are still plenty of hydrogen-related projects in development. Plus, the U.S. Department of Energy invested $7 billion in clean hydrogen to help create seven hydrogen hubs around the U.S.
When and if changes are made to the current 45v tax credit rules, hydrogen stocks could help investors become overnight millionaires. While we can always look at rebounding heavyweights like Linde (NASDAQ:LIN) and Air Products and Chemicals (NYSE:APD) again, let’s look at cheaper alternatives for top hydrogen stocks.
Bloom Energy (BE)
After finding strong double-bottom support at around $9, Bloom Energy (NYSE:BE) is now up to $11.31. From here, if it can break above prior resistance at $12.50, it could test $15.
The company, which designs and manufactures solid oxide fuel cells that produce electricity through an electrochemical process with its Energy Servers, just saw its stock upgraded. In fact, analysts at Truist just upgraded the stock to a hold rating with an $11 price target. Even better, Bloom Energy recently teamed with Shell (NYSE:SHEL) to study decarbonization solutions with its hydrogen electrolyzer technology.
Bloom also just won up to $75 million in tax credits to expand fuel cell and electrolyzer production capacity and advance operating efficiency at its multi-gigawatt (GW) Fremont, California, manufacturing plant,” as noted by Seeking Alpha. “The funding is part of $4 billion in tax credits announced by the Biden administration to accelerate domestic clean energy manufacturing and reduce greenhouse gas emissions at industrial facilities.”
Plug Power (PLUG)
Plug Power’s (NASDAQ:PLUG) chart may be a disaster, but don’t write the stock off just yet. It’s another one of the top hydrogen stocks to consider long-term.
For one, Plug says it resolved its “going concern” doubts. The company “no longer sees substantial doubt in its ability to continue as a going concern; the company has determined it has sufficient cash on hand coupled with available liquidity to fund its ongoing operations for the foreseeable future,” as noted by Seeking Alpha.
Two, the company just said it saw a “substantial advancement” with its plants in Georgia and Tennessee. It also noted that its Louisiana joint venture with Olin (NYSE:OLN) is on track to see mechanical completion by the end of the third quarter.
Plus, it just signed two contracts to deliver basic engineering and design packages (BEDP) for projects in Europe and the U.S. That, according to Plug Power, will have a combined capacity of up to 350 megawatts of electrolyzers.
Direxion Hydrogen ETF (HJEN)
Or, we can always jump into an exchange-traded fund (ETF) like the Direxion Hydrogen ETF (NYSEARCA:HJEN). Sure, its chart is an absolute disaster, but give it time. Should we see improvements to the 45v tax credits, and big demand for more hydrogen projects and investments, it and its 30 holdings could push aggressively higher.
With an expense ratio of 0.45%, the ETF offers exposure to about 30 hydrogen stocks with a focus on hydrogen production and generation, storage and supply, fuel cells and batteries, in addition to systems, solutions, membranes and catalysts.
Some of its top holdings include Bloom Energy, Air Liquide (OTCMKTS:AIQUY), Ballard Power (NASDAQ:BLDP), Linde and Plug Power.
What’s nice about an ETF like HJEN is that it offers solid exposure to multiple hydrogen names at a low cost. For example, if I wanted to buy 100 shares of HJEN, it would cost me close to $1,040. If I were to buy just one of the ETF’s holdings such as Linde, for example, it would cost me closer to $44,300. I’d rather pay $1,040 for greater exposure.
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.
