In this article, we discuss 10 best hydrogen and fuel cell stocks to buy for 2024. If you want to skip our discussion on the hydrogen and fuel cell market, head directly to 5 Best Hydrogen and Fuel Cell Stocks To Buy For 2024.
Hydrogen and hydrogen-based fuels can play a crucial role in lowering emissions in sectors where emission reduction is challenging, and feasible alternative solutions are either unavailable or difficult to implement. According to Mordor Intelligence, the fuel cell market was valued at approximately $5.40 billion in 2023, and it is expected to reach $22.12 billion by 2028. This represents a compound annual growth rate (CAGR) of 32.59% over the forecast period from 2023 to 2028. The expected drivers for this market expansion include decreasing costs associated with the production of green and blue hydrogen, along with an increasing demand from the automotive sector.
The impact of substantial investments in renewable infrastructure is likely to become more evident in 2024, with regulatory support enhancing renewable energy and transmission expansion to address grid constraints, as per Deloitte’s ‘2024 renewable energy industry outlook’. This may contribute to the establishment of a strong domestic clean energy industry with robust supply chains supporting the deployment of solar, wind, storage, and green hydrogen technologies. The Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) have played a significant role in boosting renewables through historic investments in different programs, grants, and tax credits, resulting in over $227 billion in announced public and private investments in utility-scale solar, storage, wind, and hydrogen in the last two years.
According to the Deloitte report, the IIJA and the IRA have set the stage for the emergence of a new green hydrogen economy, which currently faces a substantial gap between announced and actual investments, with more than $50 billion announced and less than US$1 billion realized. This gap reflects uncertainties surrounding pending Treasury guidance on tax credits, which are expected to enhance the competitiveness of green hydrogen.
While there is a growing number of announcements for new projects aiming to produce low-emission hydrogen, only 5% of these projects have made firm investment decisions, according to the International Energy Agency (IEA). This hesitation is mainly due to uncertainties surrounding the future demand outlook, lack of clarity regarding certification and regulation, and insufficient infrastructure for delivering hydrogen to end users. Despite the continuous growth in hydrogen demand, it remains largely concentrated in traditional applications. Novel applications in heavy industry and long-distance transport currently make up less than 0.1% of hydrogen demand, but they are expected to account for one-third of global hydrogen demand by 2030 in the Net Zero Emissions by 2050 scenario. While an increasing number of countries are unveiling national strategies and implementing concrete policies to support early adopters, delays in policy implementation and a lack of strategies for creating demand are hindering the widespread adoption of low-emission hydrogen production and utilization.
In an unfortunate turn of events, a preliminary version of the Treasury Department’s guidelines for claiming tax credits related to hydrogen production under President Joe Biden’s climate law was leaked on December 5. Advocates are concerned that the proposed requirements could potentially hinder the growth of the emerging hydrogen industry. The draft suggests incorporating conditions put forward by some environmentalists, restricting the $3-per-kilogram credit to hydrogen production facilities powered by recent clean energy projects such as wind or solar, within the past three years. The Treasury Department’s draft guidance also stipulates that hydrogen projects must receive their power from newly established clean energy sources sharing the same grid on an annual basis until 2027, after which this requirement shifts to an hourly basis from 2028 onward, according to insiders. This matter has triggered a heated lobbying conflict and extensive discussions within the Biden administration, leading to a delay in the release of guidance. Bloomberg quoted Jason Grumet, chief executive officer of the Washington-based American Clean Power Association, on this matter:
“If true, the Biden administration’s proposed strategy for implementing these provisions will fail to get this new industry off the ground. It is surprising and disappointing that the administration would propose such a rigid approach that is at odds with decades of learning about new technology deployment.”
On a positive note, workforce challenges, especially in new industries like clean hydrogen, are being addressed through multiyear workforce plans associated with the seven hydrogen hubs, expected to generate 324,280 direct jobs across 16 American states. There is significant growth potential in the hydrogen and fuel cell market. Some of the best stocks to buy for 2024 include Linde plc (NASDAQ:LIN), Chevron Corporation (NYSE:CVX), and Air Products and Chemicals, Inc. (NYSE:APD).
Photo by Darren Halstead on Unsplash
Our Methodology
We chose the top hydrogen and fuel cell stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 910 elite hedge funds tracked as of the end of the third quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
Best Hydrogen and Fuel Cell Stocks To Buy For 2024
10. Plug Power Inc. (NASDAQ:PLUG)
Number of Hedge Fund Holders: 26
Plug Power Inc. (NASDAQ:PLUG) provides clean hydrogen and zero-emission fuel cell solutions for different applications, including supply chain, logistics, electric vehicles, and stationary power markets worldwide. The company focuses on establishing a complete green hydrogen ecosystem, consisting of production, storage, transportation, and dispensing infrastructure.
On December 6, Morgan Stanley slashed its rating on Plug Power Inc. (NASDAQ:PLUG) from Equal Weight to Underweight, setting a new price target of $3, down from $3.50. The downgrade is attributed to growing concerns about liquidity and deteriorating hydrogen economics.
However, Plug Power Inc. (NASDAQ:PLUG) saw an upward surge in hedge fund sentiment during the third quarter of 2023. According to Insider Monkey’s data, 26 funds were bullish on Plug Power Inc. (NASDAQ:PLUG) at the end of September, up from 20 funds in the prior quarter.
9. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 29
Bloom Energy Corporation (NYSE:BE) specializes in designing, manufacturing, and installing solid-oxide fuel cell systems for on-site power generation globally. The company’s flagship product, the Bloom Energy Server, utilizes solid oxide technology to convert various fuels, including natural gas and hydrogen, into electricity without combustion.
On November 8, Bloom Energy Corporation (NYSE:BE) reported a Q3 non-GAAP EPS of $0.15 and a revenue of $400.3 million, outperforming Wall Street estimates by $0.19 and $31.28 million, respectively. Revenue for the period increased nearly 37% compared to the prior-year quarter.
According to Insider Monkey’s third quarter database, 29 hedge funds were long Bloom Energy Corporation (NYSE:BE), same as the prior quarter. Philippe Laffont’s Coatue Management is a prominent stakeholder of the company, with 3.45 million shares worth $45.8 million.
Like Linde plc (NASDAQ:LIN), Chevron Corporation (NYSE:CVX), and Air Products and Chemicals, Inc. (NYSE:APD), Bloom Energy Corporation (NYSE:BE) is one of the best hydrogen stocks to invest in.
ClearBridge Investments made the following comment about Bloom Energy Corporation (NYSE:BE) in its Q3 2022 investor letter:
“We were active in repositioning the portfolio in the quarter as market crosswinds opened idiosyncratic opportunities, adding two new industrial companies. Bloom Energy Corporation (NYSE:BE) is an electrical equipment company that makes solid-oxide fuel cell systems for on-site power generation, serving a variety of industries. Its fuel cells convert natural gas, biogas or hydrogen into baseload (non-intermittent) electricity without combustion, so there is low or no carbon emission. We expect significant upside through its ability to support the growing hydrogen economy, with a large opportunity for this in South Korea and meaningful policy support in the U.S. via the IRA, while other markets include biogas, carbon capture and marine transportation. Its natural gas energy server business is growing in the U.S. amid higher grid reliability concerns.”
8. Cummins Inc. (NYSE:CMI)
Number of Hedge Fund Holders: 30
Cummins Inc. (NYSE:CMI) is an American company that designs, manufactures, and services diesel and natural gas engines, electric and hybrid powertrains, and related components. The company provides a range of products and services, including engines, power generation systems, filtration systems, emission solutions, and electrified power systems with battery, fuel cell, and hydrogen production technologies. It is one of the top hydrogen and fuel cell stocks to buy.
On November 2, Cummins Inc. (NYSE:CMI) reported a Q3 non-GAAP EPS of $4.73 and a revenue of $8.43 billion, outperforming Wall Street consensus by $0.04 and $250 million, respectively.
According to Insider Monkey’s third quarter database, 30 hedge funds were bullish on Cummins Inc. (NYSE:CMI), compared to 33 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the leading position holder in the company, with 2.48 million shares worth $567.6 million.
7. BP p.l.c. (NYSE:BP)
Number of Hedge Fund Holders: 35
BP p.l.c. (NYSE:BP) is involved in the production and trading of natural gas, integrated gas and power, as well as the operation of wind power, hydrogen, and carbon capture facilities. The company operates through Gas & Low Carbon Energy, Oil Production & Operations, and Customers & Products segments. It is one of the best hydrogen stocks to monitor.
On October 31, BP p.l.c. (NYSE:BP) declared a quarterly dividend of $0.4362 per American depositary share, in-line with previous. The dividend is payable on December 19, to shareholders on record as of November 10.
According to Insider Monkey’s third quarter database, 35 hedge funds were bullish on BP p.l.c. (NYSE:BP), compared to 36 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 18.3 million shares worth $711.2 million.
6. DuPont de Nemours, Inc. (NYSE:DD)
Number of Hedge Fund Holders: 38
DuPont de Nemours, Inc. (NYSE:DD) is a multinational chemical company that announced its inaugural product for green hydrogen production, the DuPont AmberLite P2X110 Ion Exchange Resin, on September 26, 2023. Specifically engineered for the distinctive chemistry of electrolyzer loops, this ion exchange resin is intended to facilitate the generation of hydrogen from water. Alan Chan, Global Vice President and General Manager, DuPont Water Solutions, commented:
“The pursuit of new sources of clean energy is critical, with green hydrogen well positioned to substantially reduce global carbon emissions. At DuPont Water Solutions, we are very excited to introduce our AmberLite™ P2X110 Ion Exchange Resin in support of these trends toward electrification and decarbonization.”
On October 17, DuPont de Nemours, Inc. (NYSE:DD) declared a $0.36 per share quarterly dividend, in line with previous. The dividend is distributable on December 15, to shareholders on record as of November 30.
According to Insider Monkey’s third quarter database, 38 hedge funds were bullish on DuPont de Nemours, Inc. (NYSE:DD), compared to 39 funds in the prior quarter. Dan Loeb’s Third Point is the biggest stakeholder of the company, with 4.15 million shares worth $309.5 million.
In addition to Linde plc (NASDAQ:LIN), Chevron Corporation (NYSE:CVX), and Air Products and Chemicals, Inc. (NYSE:APD), DuPont de Nemours, Inc. (NYSE:DD) is one of the top hydrogen stocks to monitor.
Third Point made the following comment about DuPont de Nemours, Inc. (NYSE:DD) in its Q4 2022 investor letter:
“We recently increased our investment in DuPont de Nemours, Inc. (NYSE:DD), a specialty chemical company run by legendary value creator Ed Breen, who is leading a corporate transformation. In November, DuPont divested its most cyclical and lowest margin business segment, Mobility & Materials, to Celanese for $11 billion, or 14x 2023e EV/EBITDA. Following the divestiture, the improved DuPont trades at 11x 2023e EV/EBITDA, which represents a ~30% discount to its peer group.
We believe the company is laser-focused on closing this gap. First, $5 billion of the proceeds are being deployed to repurchase nearly 15% of its outstanding shares. The next significant catalyst for the stock is a potential settlement of PFAS-related multidistrict litigation in South Carolina, which remains an overhang on the stock even though DuPont’s PFAS liability was largely ring-fenced by the 2021 settlement with Chemours and Corteva. DuPont’s strong management team is eager to demonstrate the business quality of the new portfolio during the current period of economic volatility. We expect the combined catalysts of increased share repurchases, the pending resolution of legal claims, and the new business structure to drive meaningful value for shareholders.”
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Disclosure: None. 10 Best Hydrogen and Fuel Cell Stocks To Buy For 2024 is originally published on Insider Monkey.