Recently, the Department of Energy unveiled a groundbreaking $750 million investment across 52 U.S. projects aimed at slashing the cost of clean hydrogen and solidifying America’s premier status in the burgeoning clean hydrogen industry. This development is a potent propellant for hydrogen stocks, hinting at their imminent upward trajectory.
The government agency highlighted that these initiatives are positioned to establish U.S. manufacturing capabilities to generate 14 gigawatts of fuel cells annually, sufficient to power 15% of medium- and heavy-duty trucks sold each year. Furthermore, the projects will facilitate the production of 10 gigawatts of electrolyzers annually, churning out an additional 1.3 million tons of clean hydrogen yearly.
Adding to this fervor, MarketsandMarkets predicts that the global hydrogen market could skyrocket to a value of approximately $410.6 billion by 2030, soaring from $242.7 billion in 2023. This exponential growth is a direct result of worldwide governments spearheading the creation of hydrogen-powered, cleaner energy ecosystems and essential infrastructure, considering that hydrogen’s emissions solely consist of benign water vapor and warm air, devoid of any greenhouse gas emissions.
As the investment community begins to stir, investors are eyeing lucrative opportunities in hydrogen stocks such as:
Air Products and Chemicals (APD)
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Since the start of February, Air Products and Chemicals (NYSE:APD) surged from approximately $212 to a recent peak of $244.63. Looking ahead, I anticipate a retest of the bearish gap around $260 in the short term. Subsequently, aiming for $272 seems plausible as the hydrogen narrative gains further traction.
In addition, while waiting for the stock to recuperate more lost ground, investors can benefit from its $1.77 dividend, scheduled for payment on May 13 to shareholders as of April 1.
Seifi Ghasemi, the Chairman, President, and CEO of Air Products, reiterated, “We are unwavering in our commitment to striking the optimum balance between enriching our shareholders and capitalizing on growth prospects. In 2024, we anticipate returning approximately $1.6 billion to our shareholders, continuing a legacy of over 40 years of incrementally growing dividends. Simultaneously, we persist in executing profitable industrial gas and clean hydrogen ventures that drive sustainability and the energy transition.”
Notably, JP Morgan recently reaffirmed its overweight rating on the APD stock, citing the company’s strategic emphasis on green hydrogen production for the European market.
Linde (LIN)
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Linde (NASDAQ:LIN) stands as a frontrunner among hydrogen stocks for multiple reasons. Apart from its continuous upward trajectory, the company offers a robust dividend. Although it has currently become technically overbought and might need to undergo a pullback, LIN remains a promising long-term investment.
In my last mention of LIN stock on March 4, it was trading around $448. At that time, I projected a potential spike to $480 in the near future. In line with my expectations, the company augmented its dividend by 9% to $1.39 per share, payable on March 28 to shareholders holding as of March 14.
Though LIN has not quite reached $480 yet, it came within $3 of that target. Noteworthy is that “The company’s pricing strategy and cost management initiatives have contributed to margin expansion and an anticipated robust earnings growth in FY24,” according to insights from Seeking Alpha. The fiscal year 2024 guidance also indicates a projected adjusted EPS growth ranging between 8% to 11%.
Direxion Hydrogen ETF (HJEN)
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Despite its seemingly dull chart, the Direxion Hydrogen ETF (NYSEARCA:HJEN) merits closer attention. With the intensifying enthusiasm surrounding hydrogen, a rebound to $12.40 is expected in the initial phase.
Possessing an expense ratio of 0.45%, this ETF provides exposure to approximately 30 hydrogen stocks, focusing on hydrogen production and generation, storage and supply, fuel cells and batteries, alongside systems, solutions, membranes, and catalysts. Some key holdings include Bloom Energy (NYSE:BE), Air Liquide (OTCMKTS:AIQUY), Ballard Power (NASDAQ:BLDP), Linde, and Plug Power (NASDAQ:PLUG).
One of the alluring aspects of an ETF like HJEN is its comprehensive exposure to multiple hydrogen entities at a minimal cost. For instance, acquiring 100 shares of HJEN would entail an expenditure of nearly $1,100, whereas purchasing a single holding from the ETF, such as Linde, may cost approximately $4,700. Opting for broader exposure at a lesser cost seems a prudent choice.
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, adhering to the InvestorPlace.com Publishing Guidelines.
