3 Hydrogen Stocks to Buy on the Dip: March 2024

Stocks to buy

Hydrogen stocks could get hot — that is if the Biden Administration loosens its new guidelines on hydrogen tax credits. If that happens, here are just a few of the top hydrogen stocks to buy.

Remember, as noted by The Verge, “The tax credit, called 45V, can save companies up to $3 per kilogram of production if they can meet the tough new standards proposed. They’ll have to purchase clean electricity from new generators that only started operating within three years of the hydrogen production facility coming online.”

The guidelines, as is, are considered too restrictive. But that could soon change. All of this is happening as the U.S. Treasury Department holds a hearing on the current tax credits. As noted by E&E News, the hearings come after 30,000 comments were submitted on draft guidance outlining how companies can obtain credits.

In addition, the administration just announced $6 billion for 33 projects across more than 20 U.S. states to help decarbonize energy-intensive industries. 

Should we see further progress, hydrogen stocks could see higher highs. Here are three you may want to consider buying on dips.

Air Product and Chemicals (APD)

Source: Andy Borysowski / Shutterstock.com

I’ve mentioned Air Product and Chemicals (NYSE:APD) quite a few times here. The last time was on Feb. 6, as APD traded at around $215 a share. It had just gapped lower as the company cut guidance. But as I noted then, “I’d buy what appears to be a severe overreaction. Plus, as investors wait for APD to recover lost ground, they can collect APD’s current yield of 3.25%.”

Shortly after, APD ran to $249.34, where it dipped again. Now, with a yield of 2.96%, APD is again a buy on its latest dip to $237.56. 

Analysts at Bank of America (NYSE:BAC) like APD, as well. In fact, in February, they upgraded APD to a Buy rating, noting, “A key driver of the fiscal first-quarter earnings miss was challenges in APD’s helium business (less than 10% of sales) from less demand and Russian exports, but we expect some recovery.” The report continued, stating, “APD’s volumes have been robust in all three regions [Americas, EMEA, Asia] in the last several quarters.”

From its current price of $237.56, I’d like to see APD initially refill its bearish gap around $265. And again, while we wait for that to happen, we can collect its yield.

Bloom Energy (BE)

Source: Sundry Photography / Shutterstock

Another one of the top hydrogen stocks to buy is Bloom Energy (NYSE:BE), which recently dipped to $9, but is starting to pivot. The company — which designs, manufactures, sells and installs solid-oxide fuel cell systems for on-site power generation — is teaming with Shell (NYSE:SHEL) to study decarbonization solutions with its hydrogen electrolyzer technology. 

The two are expected to develop replicable, large-scale solid oxide electrolyzer systems that could produce hydrogen at Shell’s assets, they noted.

Better, analysts at Truist (NYSE:TFC) just upgraded Bloom Energy to a Hold rating with an $11 target. 

“Truist’s Jordan Levy believes current valuation at ~11x his estimated 2025 EBITDA accurately reflects both the opportunities and challenges facing BE’s fuel cell business and early hydrogen efforts,” reported Seeking Alpha.

Fortunately, recent earnings negativity appears to have been fully priced in.

In its fourth quarter, the company’s EPS of seven cents missed by three cents. Revenue of $356.9 million — down 22.8% year over year — missed by $117.77 million. And unfortunately, Bloom also guided for revenues of $1.4 billion to $1.6 billion, which was below expectations for $1.74 billion. Again, though, that appears to be priced in.

Global X Hydrogen ETF (HYDR)

Source: Alexander Limbach / Shutterstock

Or, we can buy the dip and diversify with top hydrogen stocks with Global X Hydrogen ETF (NASDAQ:HYDR).

With an expense ratio of 0.5%, the ETF invests in stocks involved with hydrogen production and hydrogen fuel cell development and manufacturing. Some of its top holdings include Bloom Energy, Plug Power (NASDAQ:PLUG), Ballard Power (NASDAQ:BLDP), ITM Power (OTCMKTS:ITMPF) and Ceres Power (OTCMKTS:CPWHF).

Over the last few days, the HYDR ETF found strong support and is just starting to pivot higher from oversold conditions. 

With patience and new catalysts like those mentioned above, HYDR could eventually make its way back to $8.50. For example, should we see more government investments or if the tax issue is resolved in favor of the industry, these hydrogen stocks could get explosive again.

Right now, all we can do is invest in what should be an explosive industry and wait. 

What’s nice about the HYDR ETF is we can gain exposure to 25 related hydrogen stocks at less than $6 a share at the moment.

On the date of publication, Ian Cooper did not hold (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.

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.

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