These hydrogen companies are making big investments that will translate into healthy growth in the coming years
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The outlook for the global hydrogen economy is bullish not just for the decade but for the next few decades. I would not hesitate to conclude that there will be massive value creators among hydrogen stocks. With the industry at an aggressive investment stage, it’s a good time to remain invested in some of the best stores. These investments will translate into robust growth in the next few years.
An important point to note is that the hydrogen production cost is expected to decline by 50% through 2030. Cost will continue to decline until 2050, but at a relatively slower pace. This strengthens the bullish case for investment and its adoption.
Looking at more numbers, the annual hydrogen production is expected to reach 38MT per annum by 2030. With positive data, let’s talk about three hydrogen stocks to buy and hold that can deliver multibagger returns.
Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) is a blue-chip name among hydrogen stocks to buy. APD stock trades at an attractive forward price-earnings ratio of 20.1 and offers a dividend yield of 2.69%. With strong fundamentals and high financial flexibility, the company is making some big investments in the hydrogen economy.
To put things into perspective, the company has committed to investing $15 billion in clean energy projects by 2027. Most of the investments are directed towards building hydrogen projects. For example, NEOM Green Hydrogen Company is an equal production joint venture of ACWA Power, Air Products, and NEOM. The company is establishing the world’s largest green-hydrogen-based ammonia production facility run on renewable energy.
Air Products has also committed to building Europe’s largest blue hydrogen plant, which is expected to be on-stream in 2026. The key point is that as these big projects are commissioned in the next few years, it will positively impact growth. Also, given the financial flexibility, I expect more project announcements.
Linde Plc (LIN)
Linde Plc (NASDAQ:LIN) is another blue-chip that looks attractive from a valuation perspective and offers a dividend yield of 1.25%. Also, Linde has been making investments in hydrogen projects, and I am bullish on the company’s long-term growth outlook.
As an overview, the company is building a presence in the production, distribution, and refueling business for blue and green hydrogen. In February 2023, Linde announced a $1.8 billion investment and a long-term agreement to supply clean hydrogen to OCI. The project is expected to start in 2025.
Of course, this is not the only project. With robust financial flexibility, Linde is looking at a potential investment pipeline of $50 billion globally. An important point to note is that the company has been in the industrial gas business for decades. This makes Linde better positioned to leverage the impending growth opportunities.
I must add that Linde is targeting more than 10% growth in earnings per share. Further, the company is a dividend aristocrat with 30 consecutive years of dividend growth. I expect value creation to be sustained as some big investments are made in the coming years.
Bloom Energy (BE)
Bloom Energy (NYSE:BE) stock is another attractive name among hydrogen stocks. After a deep correction of 52% in the last 12 months, BE stock is worth considering.
In a recent development, Bloom Energy and SK Ecoplant (a Korean SK Group subsidiary) collaborated on a major hydrogen project. The partnership will utilize Bloom’s “Solid Oxide Electrolyzer technology to develop green hydrogen at scale for use as transport fuel.”
Earlier in December 2023, SK Group committed to purchase 500 megawatts of energy servers from Bloom Energy through 2027. The transaction will generate $1.5 billion in product revenue and $3 billion in service revenue over 20 years. Beyond this partnership, it’s worth noting that the company’s hydrogen-powered energy server with solid-oxide fuel cell technology has been used in multiple industries. This includes healthcare, data centers, critical manufacturing, and retailers. Therefore, the addressable market is significant, and BE stock will likely create value.
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.