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Hydrogen is a volatile gas. When mishandled, hydrogen is flammable and can lead to deadly explosions.
As an investment, hydrogen stocks have often proven similarly dangerous (metaphorically at least). Several leading pureplay hydrogen companies have seen their share prices implode over the past 24 months. Investors could be forgiven for overlooking the whole sector altogether.
However, the truth is that hydrogen can be harnessed as a clean carbon-free fuel source which should be a vital part of humanity’s power solutions over the decades to come. Hydrogen is risky, to be certain. But that volatility can potentially turn into multibagger gains when managed correctly. These are three leading hydrogen stock investments that can make the most of this opportunity.
Investing in a Diversified Hydrogen Portfolio
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The issue with hydrogen as an investment idea is that the industry is still a fledgling one. Some pureplay hydrogen companies such as Plug Power (NASDAQ:PLUG) and Ballard Power Systems (NASDAQ:BLDP) have run massive operating losses and face a challenging outlook going forward.
Given the risk inherent in dilutive money-burning operations, most investors should probably steer clear of companies like those mentioned above. One way to reduce risk, though, is to buy a diversified basket of hydrogen stocks rather than trying to pick the individual winners.
The Global X Hydrogen ETF (NASDAQ:HYDR) owns 26 different companies with varying exposures to hydrogen. It owns some of the deeply speculative names like Ballard Power Systems but also major industrial multinationals which are strongly profitable and sell hydrogen systems and solutions as part of a broader corporate strategy.
In this way, investors get a more diversified angle into the hydrogen space. And there is considerable value here now, with HYDR shares down 55% over the past year, and down 75% since the ETF launched. When sentiment comes back for hydrogen, this ETF will ride that wave.
Air Products & Chemicals: An Established Player in Hydrogen
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Air Products & Chemicals (NYSE:APD) is a specialty chemical company that produces oxygen, hydrogen, nitrogen, helium and other such gases for a wide variety of commercial and industrial uses.
As it pertains to hydrogen specifically, Air Products & Chemicals is a veteran in the field. The company has sold hydrogen for more than sixty years, and it has hydrogen operations in more than 20 countries today. It owns and operates more than 100 hydrogen plants with capacity for about seven million kilograms of hydrogen today. It integrates that with the world’s largest hydrogen distribution network.
APD stock plunged to 52-week-lows earlier this month on a weaker-than-expected earnings report. That makes for an opportunity in this global hydrogen leader. While this quarter was weak, the company maintained a strong forecast for 2024. In addition to its robust profitability from its diversified gas business, APD stock offers a solid 3.1% dividend yield.
Linde: A Key Player in the Hydrogen Revolution
Unveiling Linde’s Expanding Horizon in the Industrial Sector
A Key Player in Industrial Gas and Chemicals
Linde (NASDAQ: LIN) is a prominent industrial gas and chemical company headquartered in the U.K. The company is known for its diverse portfolio, offering a range of atmospheric gases, and specializing in the development of turnkey gas plants for its clients.
A Steady Climb in Earnings
The recent financial reports from Linde indicate a substantial upswing in earnings, propelling LIN stock to reach unprecedented highs. This remarkable feat exudes testament to the stellar performance of the company.
A Road Less Timely
Despite the impressive surge in LIN stock, Linde’s appeal as an investment opportunity may not be as immediate compared to other options such as APD stock or the hydrogen ETF. However, its sturdy fundamentals and long-term prospects make Linde an invaluable asset in any investment portfolio.
Additions to the Hydrogen Bandwagon
Linde is progressively expanding its hydrogen production facilities, as evidenced by its recent plant expansion in Alabama. This strategic move positions the company to leverage the burgeoning hydrogen-based energy market. Its emphasis on third-party solutions further fortifies its stance to capitalize on the widespread adoption of hydrogen as a sustainable fuel alternative. These steps consolidate Linde’s stance in the industry and make LIN stock a prudent and low-risk conduit to reap the rewards of hydrogen’s escalating prominence.
On the date of publication, Ian Bezek held a long position in APD stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
