For decades, the hydrogen sector went through more false dawns than Groundhog Day, repeatedly failing to break the glass ceiling of mass-market appeal mainly due to a host of technical and cost issues. Battery power has mainly been winning the race to replace the internal combustion engine (ICE), with EV companies like Tesla Inc. (NASDAQ:TSLA) hitting the fast lane while hydrogen-powered fuel cell electric vehicles (FCEVs) appeared to have stalled on the start line.
That is, until now. For the first time in U.S history, corporate America is fully embracing sustainability. Businesses, both big and small, are aggressively pushing to lower their carbon footprint--and hydrogen has emerged as one of the forgotten corners of clean energy looking to make a massive comeback.
From the European Union's ambitious hydrogen strategy and giant utilities switching to hydrogen to Wall Street doubling down on the $11 trillion hydrogen marketplace, the hydrogen sector has lately turned on the afterburners.
Stocks of fuel cell makers have particularly been shooting the lights out. Fuel cell systems are being touted as the next wave of renewable energy, especially now that there's a big push towards green hydrogen i.e., hydrogen produced 100% from renewables.
Indeed, FCEVs could one day give EVs a run for their money.
For instance, Japan has outlined plans to quit fossil fuels and import clean hydrogen with plans to have as many as 800,000 hydrogen-powered fuel cell cars on its roads by 2030. Meanwhile, this survey of 1,000 industry executives concluded that hydrogen fuel cell technology will ultimately outperform battery-powered EVs.
Here are some high-flying fuel cell stocks with positive outlooks.
#1. Plug Power
Market Cap: $5.7B
12-Month Returns: 396.0%
Plug Power Inc.(NASDAQ:PLUG) is widely regarded as the leader of fuel cell companies. PlugPower has built a successful niche developing technology for forklifts, where fueling times can be critical.
PLUG stock has been red hot, more than quadrupling in the year-to-date, thanks to a very positive outlook for the company's core materials handling business. Plug Power's GenKey forklifts are considered best-in-breed and have recording surging demand. In fact, PlugPower forklifts not only need a third of the time required by electric battery forklifts to charge (5 mins vs. 15 mins) but also require much less storage space, are more efficient, and enjoy much longer lifecycles.
Further, PlugPower has established itself as a top innovator in the sector. In the past year alone, PLUG developed, engineered, tested, and released into production three new fuel cell solutions geared towards the rapidly growing European market.
Wall Street has caught on to this, and expects PlugPower to record 40% annual revenue growth through 2025 with massive gross margin expansion from 11% today to 30% by then, thanks mainly due to increased scale. PlugPower management has guided for materials handling revenue of $750 million by 2024, or about triple the current level. Related: The Car Giants That Knew About Climate Change 50 Years Ago
More importantly, PlugPower is looking to vastly expand its addressable market. The company is targeting the passenger vehicles, port applications, and large-scale stationary markets, estimated at a combined $300 billion or 10x the current size of its materials handling business.
In short, there's a lot to like about this company.
#2. Bloom Energy
Market Cap: $2.1B
12-Month Returns: 466.9%
YTD Returns: 106.4%
Source: CNN Money
Bloom Energy Corp.(NYSE:BE) is a California-based fuel cell company that designs, manufactures, and sells solid-oxide fuel cell systems. Like most hydrogen and fuel cell companies over the past decade, Bloom Energy has not been a particularly good investment thanks to its high cash burn.
However, BE has lately been able to change that narrative, becoming the first fuel cell maker to become cash-flow positive thanks to not only its bigger scale but also the meteoric rise of renewables and green hydrogen, or hydrogen produced through the electrolysis of water using wind, solar and other renewable energy sources. Bloom has announced several major green hydrogen partnerships this year, including a JV with Samsung Heavy Industries and another with a South Korean engineering and construction company. Jointly, the two ventures could be worth some 700 megawatts in fuel cell deployments per year, or 7x Bloom's total sales over the prior year.
But it could get much better, still.
Bloom is not just content on smaller applications like forklifts and in remote power generation but is betting big on utility-scale and industrial applications such as container-ship power plants.
Given the mostly bullish bets on green hydrogen, Bloom Energy could be in a much better position to ride that wave better than its peers thanks to its bigger scale.
#3. ITM Power Plc.
Market Cap: $1.6B
12-Month Returns: 417.2%
YTD Returns: 267.8%
ITM Power Plc. (OTC:ITMPF) is a UK based company that manufactures integrated hydrogen energy equipment used to enhance the utilization of renewable energy that would otherwise be wasted.
A major catalyst for ITM Power's remarkable run has been commercial partnerships with Royal Dutch Shell (NYSE:RDS.A) and chemical giant Linde which suggest that the company's hydrogen technology has real commercial potential. Three years ago, Shell opened its first hydrogen refueling station in the UK, the first of its kind to be sited on a forecourt with the station supplied by ITM Power. Like Bloom Energy, ITM specializes in making equipment that runs on green hydrogen, leaving the company perfectly positioned in the European market.
Back in June, ITM reported that it had a "tender opportunity pipeline" worth £263m, 12x bigger than the company's order backlog of £21.8m. That's hardly surprising given how aggressively the EU is pushing hydrogen technology, particularly the green type.
By Alex Kimani for Oilprice.com
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