There’s a great deal of opportunity in some of the best hydrogen stocks.
They just need to get through a few roadblocks first. For one, we’re still waiting to see if the Biden Administration will loosen current hydrogen tax credits. According to Plug Power CEO Andy Marsh, he’s certain the proposed tax credits will be relaxed. “The regulations are going to change,” he said, as quoted by H2-View.com. “There is no doubt.”
Two, there’s no real regulation on transporting hydrogen, which could slow progress even more. Right now, according to E&E News, “No federal agency has authority to issue permits for interstate clean hydrogen pipelines. Many states also don’t have rules outlining who can issue permits for moving hydrogen within their borders.”
Still, as we wait for these issues to be resolved, some of the best hydrogen stocks have been soaring, including:
Air Products and Chemicals (APD)
On March 18, I said, “I’d like to see Air Products and Chemicals (NYSE:APD) refill its bearish gap around $260 initially. From there, it could easily test $272 as the hydrogen story gains momentum. Plus, as we wait for the stock to recover, we can collect its dividend of $1.77.”
At the time, it traded at around $243. Today, it’s up to $282.38 and could retest $300. All after it signed a 15-year agreement to deliver 70,000 tons per year of green hydrogen to energy giant TotalEnergies (NYSE:TTE) European refineries starting in 2030. According to TotalEnergies, this will help it reduce the net greenhouse gas emissions from its oil and gas operations by 40%.
Even better, APD just declared a new dividend of $1.77, which is payable on Aug. 12 to shareholders of record as of July 1. Helping, Morgan Stanley just raised its price target on APD to $280 with an equal weight rating. BMO Capital also raised its target to $276 from $263 with an outperform rating.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) recently pulled back to strong support at $2.97, where it’s a buy. From that last traded price, I’d like to see PLUG initially retest $3.80. Longer term, I’d like to see it closer to $5.50 as the hydrogen story heats up.
Helping, the company just received a conditional commitment for a loan guarantee for as much as $1.66 billion from the U.S. Department of Energy.
In addition, the company said it saw a “substantial advancement” with its plants in Georgia and Tennessee. It also noted that its Louisiana joint venture with Olin (NYSE:OLN) is on track to see mechanical completion by the end of the third quarter. Plus, it just signed two contracts to deliver basic engineering and design packages (BEDP) for projects in Europe and the U.S.
Even better, H.C. Wainwright analysts are bullish on the stock, with a price target of $18. Craig-Hallum analysts also have a buy rating on the stock with a price target of $5.
Global X Hydrogen ETF (HYDR)
Or, you could always diversify with an exchange-traded fund, like the Global X Hydrogen ETF (NASDAQ:HYDR).
With an expense ratio of 0.5%, the ETF invests in stocks involved with hydrogen production, and the development and manufacturing of hydrogen fuel cells. Some of its top holdings include Bloom Energy (NYSE:BE), Plug Power, Ballard Power (NASDAQ:BLDP), ITM Power (OTCMKTS:ITMPF) and Ceres Power (OTCMKTS:CPWHF).
Last trading at $6.34, it’s a buy. From here, I’d like to see it triple from here when hydrogen names start to take off again. According to Goldman Sachs and Bank of America, the hydrogen market could potentially become a $12 trillion market.
In addition, according to the International Energy Agency, global hydrogen demand will need to double from about 94 million tons in 2021 to more than 180 million tons by 2030. Europe may need to see a six-fold increase in demand by 2050.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
