Betting on hydrogen stocks to buy may seem unwise at this point. Green energy stocks have struggled in the past year or so due to broader market headwinds. However, as markets gear up for expected rate cuts later this year, hydrogen stocks appear to be a smart wager.
Another major highlight for the second half 2024 might be a broader stock market teeming with winners. In contrast, we saw a remarkably narrow stock market last year, with AI stocks ruling the roost. Moreover, the current lull in the green energy space won’t be there forever. Countries worldwide are investing in large-scale hydrogen and renewable energy projects, pushing towards a net-zero future. It’s an excellent time to consider investing in the three top hydrogen stocks to buy with game-changing potential.
Air Products (APD)
Air Products (NYSE:APD) thrives as one of the top players in the industrial gas arena, with a unique focus on large-scale gasification projects. In recent years, it’s been making pioneering advances in hydrogen fuel technologies, led by its plans to build a $7 billion hydrogen production facility in Louisiana. Once operational, the plant could offer significant cash flow, serving critical sectors, including trucking and ocean shipping.
Furthermore, the firm wants to expand its green hydrogen capabilities further with a massive $4 billion plant in Texas. CEO Seifi Ghasemi remains optimistic about the approval of the facility, which could become the largest of its kind in the country.
Moreover, APD has decided against spinning off its hydrogen business into a separate entity in sensing the market choppiness. According to Ghasemi, the hydrogen market is still developing, and with the company executing $20 billion worth of projects, it is unwise to consider financial engineering at this juncture.
Linde (LIN)
Linde (NASDAQ:LIN) has established its dominance as the largest industrial gas company, benefitting from various revenue sources spanning multiple industries. Additionally, it’s a top player in the hydrogen energy space, boasting a strong presence across the entire value chain, including production, processing, storage and distribution. Moreover, it has close to 200 hydrogen refueling stations and 80 hydrogen electrolysis plants globally.
Its solid core business as a backbone shields Linde from the volatility in the hydrogen industry. Moreover, despite the headwinds, it continues to expand its margins, expecting a healthy 8% to 10% jump in adjusted EPS in fiscal 2024 compared to last year. This optimism is mainly linked to its effective price increases and productivity gains offsetting softer volumes.
Also, Linde’s management focuses on delivering value for its shareholders through share repurchases and bumping dividend payouts. Yielding 1.3%, the company has grown its dividend payouts by 31 consecutive years.
Cummins (CMI)
Cummins (NYSE:CMI) is known for its powerful diesel generators and engines. However, lately, it has been looking to pivot into the hydrogen and energy storage sectors to add new layers to its already illustrious growth story.
Through its Accelera segment, Cummins is looking to develop innovative technologies, including electrified power systems and hydrogen production. Moreover, the segment has already shown its long-term promise, with its fuel cells powering North America’s first green hydrogen passenger train.
Furthermore, it recently showed off its next-generation B6.7H hydrogen engine at a Paris trade show. Its management suggests that the B6.7H can seamlessly integrate with current machinery, transmissions and industry practices. Hence, it enhances its market appeal and reduces environmental impact. Therefore, CMI’s commitment to its green energy goals and its ventures into hydrogen and electrified solutions could lead to industry-wide disruption ahead.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.