7 Hot Hydrogen Stocks With Room to Run in 2023

Hydrogen stocks could be some of the most explosive investments of 2023. Goldman Sachs says the hydrogen space could be a $12 trillion market by 2030. Analysts at Bank of America say green hydrogen could be worth more than $11 trillion by 2050. Morgan Stanley sees a potential $11 trillion hydrogen opportunity, too.

Even the International Energy Agency says the world still needs an investment of $4 trillion by 2030 to meet global net zero emission goals. Also, according to a new report from the International Renewable Energy Agency (IRENA), “the consumption of hydrogen by G7 countries could grow between four and seven times by 2050.”

That means that it’s time to start buying hydrogen stocks right now. Accordingly, here are seven top ways investors can do just that.

Defiance Next Gen H2 ETF (HDRO)

One of the best ways to diversify into hot sectors is with an exchange traded fund (ETF), such as the Defiance Next Gen H2 ETF (NYSE:HDRO).

Not only does this ETF offer a good deal of exposure to industry giants, but it does so at a much lower cost. For example, the HDRO ETF, which has an expense ratio of 0.30%, trades at around $10 a share. With this ETF, investors gain exposure to stocks such as Plug Power (NASDAQ:PLUG), Bloom Energy (NYSE:BE), Ballard Power Systems (NASDAQ:BLDP), FuelCell Energy (NASDAQ:FCEL), ITM Power (OTCMKTS:ITMPF), and dozens more. If I were to buy 100 shares of the HDRO ETF, it’d cost me a little more than $1,000.

Also, to be included in this ETF, a company must generate 50% of its revenue from hydrogen and/or a fuel cell project, or be involved in the development of fuel cell or hydrogen sources, according to Defiance ETFs.

Global X Hydrogen ETF (HYDR)

At $11.85 per share, with an expense ratio of 0.50%, the Global X Hydrogen ETF (NASDAQ:HYDR) is another ETF worth considering. This exchange traded fund invests in stocks involved with hydrogen production, with the integration of hydrogen into energy systems, and in the development of fuel cells and other technologies.

Some of its top holdings include Bloom Energy, Plug Power, Ballard Power, Fuel Cell Energy, Cummins (NYSE:CMI), ITM Power, and Ceres Power Holdings (OTC:CRPHY) to name a few.

Granted, the HYDR chart is as ugly as ever. But give it time. When hydrogen stocks get red-hot, so will ETFs like HYDR.

Bloom Energy (BE)

One of the most well-known hydrogen stocks is Bloom Energy, which specializes in solid-oxide fuel cells. So far, these fuel cells have been deployed in healthcare centers, data centers, retailers, auto manufacturers, and with prominent clientele such as Alphabet (NASDAQ:GOOG), Owens Corning (NYSE:OC), Panasonic (OTCMKTS:PCRFY), and Walmart (NYSE:WMT) to name a few. Better, its fuel cells are combustion-free, highly efficient, and produce zero carbon.

Analysts seem to like Bloom Energy, for these reasons among others. In fact, Jefferies’ Sam Burwell just initiated coverage with a buy rating and a $29 price target. Bank of America analyst Julien Dumoulin-Smith also has a buy rating, with a price target of $34. He argues that many of the company’s opportunities still aren’t priced into its current share price.

Thus far, Bloom’s earnings have been ok. Heading into the third quarter, the market was looking for an adjusted loss of six cents on sales of $277.2 million. Unfortunately, Bloom lost 20 cents, on an adjusted basis. However, sales came in 41% higher year over year to $292.3 million. Even though it did miss on EPS, the company believes it will see $1.1 billion to $1.15 billion in revenue the fourth quarter. This could drive the company’s non-GAAP profit margin to a positive 1%.

While Bloom will have to prove itself, the stock is still a good long-term bet on hydrogen’s future.

Plug Power (PLUG)

Plug Power, like many of its peers, has been beaten up by the broader market. However, as the hydrogen market explodes, this is one of the top stocks to own.

Much like Bloom Energy, Plug missed on earnings. That said, analysts aren’t too concerned. In early November, the company posted a third-quarter loss of 30 cents per share on sales of $188.6 million. The market was looking for a loss of 21 cents per share on sales of $238.1 million. So, Plug Power produced a nice little mess. The good news is the company does expect stronger results next year, with sales of $1.4 billion, which came in line with forecasts.

ISI Evercore analyst James West, who has a buy rating on the stock with a $40 price target doesn’t seem worried. Instead, he noted the company is still making progress on a few of its hydrogen plants across the country. Susquehanna analyst Biju Perincheril also has a buy rating on the stock, with a target of $28 a share.

In addition, let’s not forget Plug Power has been signing deals with major companies, including Walmart, Amazon (NASDAQ:AMZN), Home Depot (NYSE:HD), Nike (NYSE:NKE), Boeing (NYSE:BA), FedEx (NYSE:FDX), and others. I could go on. Point is, before the hydrogen story explodes, own Plug Power.

Ballard Power (BLDP)

Ballard Power’s zero-emission proton exchange membrane (PEM) delivers fuel cell power for various mobility modalities including buses, trucks, trains, and marine vessels. According to the company, “Fuel cells improve the performance of electric buses by generating onboard power from hydrogen to recharge the batteries. Today, bus manufacturers offer fuel cell buses to transit agencies as a standard electric propulsion option.”

Accordingly, it may be no surprise to learn that Ballard Power just announced a purchase order from Solaris Bus & Coach, a leading European bus manufacturer, for 25 hydrogen fuel cell engines. In September, Ballard signed a contract with Stadler to supply fuel cell engines to power the first hydrogen train in the U.S.

Better, this company received a 14-unit order for 200kW fuel cell modules from Siemens Mobility. These fuel cells will be used to power a fleet of seven Mireo Plus H passenger trains. In early 2022, Ballard partnered with ABB (NYSE:ABB) to develop fuel cells that power ships. It even announced a test with Chart Industries (NYSE:GTLS) to power fuel cells with liquid hydrogen.

FuelCell Energy (FCEL)

FuelCell Energy’s platforms are helping businesses and communities with power generation, carbon capture, hydrogen production, and energy storage. It’s one of the many companies that will be able to take advantage of the tax credits under the Inflation Reduction Act.

According to FCEL CEO Jason Few, as quoted in a company press release, “FuelCell Energy’s fuel cells are manufactured in Connecticut with over 80 percent of all materials sourced within the United States. FuelCell Energy’s distributed energy platform can be deployed in economic and clean energy-challenged communities, further leveraging the IRA.”

Thus, while the company did see a wider-than-expected third-quarter loss of eight cents per share, as compared to expectations for an EPS loss of six cents, the company did report its strongest revenue growth in five years, with revenue coming in at $43.1 million. That was significantly higher than analyst estimates of $35.8 million.

Air Products & Chemicals (APD)

Air Products & Chemicals (NYSE:APD) is one of the world’s leading hydrogen suppliers. At the moment, the company owns and operates more than 100 hydrogen plants around the world. In 2021, the company announced a $4.5 billion clean energy complex in Louisiana, which is expected to produce about 750 million standard cubic feet per day of hydrogen. It also announced the asset acquisition and financing of a $12 billion project in Saudi Arabia, with Phase 2 closing in 2023.

Analysts like the stock, too. Goldman Sachs, for example, initiated a buy rating, with a price target of $296. Analyst Duffy Fischer said that “Based on Air Products’ strong industrial gas on-site earnings, expansion into new gasification projects, and investment in hydrogen, there is potential upside in the stock as investors ‘get more acquainted with the large project strategy,’” as noted by TheFly.com.

Bank of America raised its price target to $308 from $281. Seaport Global also upgraded the APD stock to a buy with a $300 price target.

On the date of publication, Ian Cooper did not have (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.