Dividend Stocks

3 Hydrogen Stocks to Buy on the Dip: June 2024

A December 2023 report indicates that the global hydrogen pipeline has increased by 35% through the year despite macroeconomic headwinds. The total number of projects stood at 1,400, representing an investment target of $570 billion through 2030. Clearly, the industry is positioned for sustained growth.

Notably, nearly all hydrogen consumed today is grey hydrogen. However, in the coming decades, the demand for grey hydrogen will decline as clean hydrogen takes its place. Therefore, the growth story is beyond the current decade. It’s estimated that by 2050, clean hydrogen demand will increase between 125 and 585mtpa. This implies ample scope for growth and value creation in the coming decades.

Therefore, let’s explore three quality hydrogen stocks to buy on correction for long term value creation.

Linde (LIN)

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Linde (NASDAQ:LIN) stock has been in a steady uptrend that’s backed by positive financial metrics. I believe that intermediate corrections would be a good opportunity to accumulate this 1.26% dividend yield stock.

As an overview, Linde is a leading industrial gases company with a 2023 turnover of $33 billion. The company is focused on the clean energy segment and has established strong presence in the hydrogen business.

Currently, Linde has a largest liquid hydrogen capacity distribution system in the world. Further, the industrial gases company has 200 hydrogen refuelling stations and 80 hydrogen electrolysis plants. With presence in production, processing, storage, and distribution, Linde is among the best hydrogen names to consider.

It’s worth noting that in 2023, Linde committed to invest $7 to $9 billion over the next two to three years in clean energy. A bulk of these investments will be directed towards boosting hydrogen capacity and conversion of existing assets to clean hydrogen. These investments are likely to translate into steady growth in the next few years.

Air Products and Chemicals (APD)

Air Products truck on motorway. APD stock.

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Air Products and Chemicals (NYSE:APD) is a blue-chip stock that has remained sideways in the last 12 months. Besides trading at an attractive valuation, APD stock offers a dividend yield of 2.59%. With the company making some big investments in hydrogen projects, expect a breakout after the current consolidation.

Furthermore, APD has $15 billion in low-carbon hydrogen projects under development. This is in-sync with the company’s targeted investment by 2027. If the demand for clean hydrogen remains robust, additionally investments are likely. Given a strong balance sheet, the company is unlikely to face any financing challenges.

Among the prominent investments, Air Products and Chemicals will be building the largest blue-hydrogen plant in Europe. This project is likely to go on-stream in 2026. Also, the company is building the world’s largest green-hydrogen-based ammonia production facility run on renewable energy. As these projects are commercialized in the next few years, Air Products and Chemicals is likely to see steady revenue upside.

Bloom Energy (BE)

BE stock Bloom Energy logo on a building

Source: Sundry Photography / Shutterstock

Bloom Energy (NYSE:BE) is among the relatively smaller names to consider after a correction of 22% in the last 12 months. As an overview, the company is a manufacturer and seller of solid-oxide fuel cell systems.

In March, Bloom Energy signed an agreement with Shell (NYSE:SHEL) to “study decarbonization solutions, utilizing BE’s proprietary hydrogen electrolyzer technology.” The partnership will be developing large-scale, solid oxide electrolyzer systems that will be used for hydrogen production at Shell’s assets. Besides providing visibility for growth, the partnership is a validation of Bloom Energy’s solid oxide electrolyzer technology.

Further, the solid oxide fuel cells have been deployed in applications across healthcare, data centers, critical manufacturing and retailers. Therefore, growth potential in the coming years is significant.

For Q1 of 2024, Bloom Energy reported revenue of $235.3 million. Year-over-year (YOY), revenue declined by 14.5%. However, the management is “seeing strong market interest”, so expect sales to gain traction in the coming quarters.

On the date of publication, Faisal Humayun did not hold (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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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