Let’s Review: Hydrogen Energy Stocks
Did you know the fuel cell market size is expected to reach $28.95 billion by 2028, up from $2.62 billion in 2020? At a compound annual growth (CAGR) of 36%, it’s one of the fastest-growing segments of the renewable energy market.
Hydrogen energy stocks are those from companies that are investing in hydrogen fuel cells. According to the U.S. Energy Information Administration, these fuel cells produce electricity by combining hydrogen and oxygen. The hydrogen reacts with the oxygen across something similar to a battery, to produce electricity, water, and a little bit of heat.
These stocks are wildly popular as we search for alternative energy that is more eco-friendly. As scientists continue to make advancements in the field, we can expect wider global adoption. In this article, we’ll look at four of the hydrogen energy stocks worth watching and a couple of key risks involved.
4 Hydrogen Stocks to Know and Watch Closely
So, which hydrogen energy stocks should you take a closer look at from the get-go? We’ve handpicked these four stocks to help you get started. These aren’t listed in any particular order, though, so one isn’t necessarily any better than the others.
FuelCell Energy (NASDAQ: FCEL)
FuelCell Energy, Inc. is a fuel cell power company headquartered in Danbury, CT. It was founded in 1969. The company designs, manufactures, operates, and services direct fuel cell power plants. These power plants run on biogas and natural gas.
In 2020, the company reported $70.87M in revenue, a significant increase from $60.75M in 2019, but a major decrease from the $89.44M reported in 2018. The 52-week high for their stock price was $29.44 and the 52-week low was $1.58.
Bloom Energy Corp. (NYSE: BE)
Bloom Energy Corp manufacturers and markets solid oxide fuel cells for onsite electricity production. It was founded in 2001 and went public in 2018. The company is headquartered in San Jose, California. It is considered one of the major players in fuel cell technology.
Its mission is simple: to make clean, reliable, and affordable energy for everyone worldwide. With a mission as critical and global as this one, it’s no wonder why investors are keeping a close eye on Bloom Energy and the promise it shows.
In 2020, the company reported $794.25M in revenue, a significant increase from $785.18M in 2019, and $632.65M in 2018. The 52-week high was $44.95 and the 52-week low was $6.93.
Plug Power, Inc. (NASDAQ: PLUG)
Plug Power, Inc. is a company dedicated to the development of hydrogen fuel cell systems meant to replay conventional batteries. These cells aim to replace batteries in electric vehicles and other electricity-powered equipment. It was founded in 1997 and is headquartered in Latham, New York.
Last year, the company reported a loss of $100.47M in revenue, a significant decrease from $230.24 in 2019, and $174.63M in 2018. However, the company is also directly tied to and services market giants such as Amazon, BMW, Walmart, and The Southern Company; this may be an indication of its stock potential.
The 52-week high was $75.49 and the 52-week low was $3.79.
Ballard Power Systems, Inc. (NASDAQ: BLDP)
Ballard Power Systems, Inc. develops and manufactures proton exchange membrane fuel cell products. The company focuses on heavy-duty motive, portable power, engineering, and material handling. The company was founded in 1979 and is headquartered in Burnaby, Canada.
In 2020, the company reported $139.33M in revenue, a slight difference from $140.28M in 2019, and $125.19M in 2018. The 52-week high was $42.28 and the 52-week low was $8.87.
Are Hydrogen Energy Stocks… Worth the Energy?
As with all stock investments, there are some risks involved in the hydrogen economy. Let’s take a closer look at things to consider as you make your investment decisions.
Many companies that specialize in hydrogen fuel cells, even some on this list, have been generating negative margins for years. They continue to trade at high price-to-sales ratios. For them to become profitable, adoption rates need to increase.
While research-based advancements in the industry could be protected by patents, the basic technology is open for everyone. Larger companies, such as those in utilities, batteries, and oil and gas could commercialize products faster.
If these companies want to live up to their high valuations, they have to be able to offer better products at a reasonable cost. As competition increases, figure margin pressure may be intense.
Fuel Cells Aren’t Energy Efficient
Hydrogen cells are most commonly made with a steam reforming process. This uses a natural gas input, which draws away from the environmentally-friendly aspect of this source of power.
Up to 95% of hydrogen in the U.S. currently comes from using natural gas, and the carbon emissions associated with this process destroy energy efficiency. As a result, other ways to produce hydrogen are currently under research. Electrolysis, also known as green hydrogen, is a favorite.
Slow Adoption Rate
At this point in time, hydrogen fuel cells are still in the early stages of adoption. While costs are falling and energy efficiency is increasing, we’re starting to see an increase in the use of lithium-ion batteries.
This is especially true in the transportation industry.
At the end of 2019, though, there were only 25,210 units of fuel cell electric vehicles (FCEV) in use around the world, compared to 7.2 million battery electric vehicles in the passenger light-duty vehicle segment. When you consider that more than 3 million electric vehicles were sold in 2020, the number on the roads is well over 10 million.
As the Biden Administration aims to make further strides in addressing climate change, we may see more regulatory changes come into play to promote faster adoption of more eco-friendly power generation options.
Want to Stay Updated on the Latest?
If you’re not ready to jump in just yet, pick a few favorites and watch them closely for a few weeks before making your initial investment. Other companies you may wish to consider are the SK Group out of South Korea and ITM Power.
Keep current with stock market news to find companies who are about to make their initial public offering (IPO) so you can get in on the ground floor with companies that have good valuations. Consider using the market cap to determine the total value of the outstanding shares of stocks to get an idea of the true size of the company.
Remember, almost all stock prices on Wall Street change rapidly throughout the day.
Nervous about choosing the investments yourself? You can always turn to exchange-traded funds (ETFs) and hedge funds. Brokers choose the actual investments, and you share the risk with other investors, while someone else controls the investment choices.
And while you watch what the market’s doing, subscribe to WALLSTNOW to learn more about stocks and investing.
In the hydrogen energy market, the best stocks are those that are investing in clean energy, reducing emissions, and focused on reducing our dependence on fossil fuels. Another area to consider investing in is alternative energy sources.
If you decide that you’d rather not invest in hydrogen energy stocks, you can always start trading penny stocks in the financial or health sectors.
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Disclaimer: All investments involve the risk of loss. Nothing on this website should be misconstrued as investment advice. Any reference to an investment’s historical or projected performance is not a recommendation or guarantee of profit or desired outcome.