3 Hydrogen Stocks to Buy for the Next Bull Run: March 2024

Stocks to buy

Renewable energy stocks had a rough 2023. Between higher interest rates and a renewed focus on profitability, investors dumped a lot of more speculative stocks in the green energy space.

The selling was especially broad within the hydrogen category. For one stark example of that, consider the Global X Hydrogen ETF (NASDAQ:HYDR). It has lost 48% of its value over the past 12 months and close to 75% of its value since 2021.

This sort of volatility shouldn’t be too shocking. Hydrogen is an emerging industry that is still in the early days of broad commercial adoption. And a lot of the pure-play hydrogen companies are still running large operating losses. However, after the huge drawdown in the hydrogen space, it could be a great time for investors to buy these three top hydrogen picks.

Air Products & Chemcials (APD)

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Air Products & Chemicals (NYSE:APD) is a specialty chemical company that produces oxygen, hydrogen, nitrogen, helium and other such gases for a wide variety of commercial and industrial uses.

Air Products & Chemicals operates across a wide range of verticals. However, the company is leaning more heavily into hydrogen nowadays thanks to the expanding market opportunity with that element. The company has sold hydrogen for more than 60 years and has hydrogen operations in more than 20 countries today. It also operates the world’s largest hydrogen distribution network. APD owns more than 100 hydrogen plants with a total capacity of around 7 million kilograms.

APD stock fell to new lows earlier this year on a disappointing earnings report. Indeed, the company has seen a near-term slowdown. But it is investing for the future with plans for $32 billion of new investments over the next decade. That is a massive number compared to the company’s current $53 billion market cap. This should position Air Products & Chemicals for a major growth wave once hydrogen comes back into fashion.

Linde (LIN)

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Linde (NASDAQ:LIN) is another industrial gas and chemical company. Hailing from the U.K., it sells the standard range of atmospheric gasses. It also has another attractive line of business in building turnkey gas plants for customers.

Linde is currently reporting solid earnings. This has made Linde stand out from the pack as so many hydrogen and renewable energy stocks underperformed this past year. Linde, by contrast, is the model of consistency. Analysts are forecasting between 9% and 12% earnings per share growth for each of the next three years.

Linde has demonstrated a consistent and repeatable pattern for successful growth. For example, the company is building out its own hydrogen production facilities, including a new plant expansion in Alabama. In addition to its own operations, the third-party offerings allow Linde to cash in more broadly as the overall hydrogen industry continues to expand in size. While LIN stock is not the cheapest of the hydrogen names, its high-quality business and stable prospects make it a great blue-chip play within the industry.

Nel Asa (NLLSF)

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Nel Asa (OTCMKTS:NLLSF) is a pure-play hydrogen company focused on proton exchange membrane electrolysis technologies. The company has partnered with prominent clients such as General Motors (NYSE:GM) to develop and commercialize its hydrogen offering.

In addition, Nel has benefitted from significant state backing. Earlier in March, Nel announced that it is receiving another $75 million from the state of Michigan in support of the company’s planned factory in the Detroit area.

Nel has not yet reached profitability. However, it is getting closer to breakeven as it scales up. And the top-line is moving nicely. Nel produced 1.8 billion Norwegian Kroner of revenues in 2023, up from KR994 million in the prior year. Meanwhile, the company’s EBITDA margin improved from -78% in 2022 to -27% in 2023.

This positive momentum, combined with continuing government support, gives Nel a shot at becoming a key piece of the hydrogen ecosystem going forward.

On the date of publication, Ian Bezek held a long position in APD stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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