However, not all hydrogen stocks are created equal. Some are too risky, facing cash flow issues and solvency fears in the past, like Plug Power (NASDAQ:PLUG). Others simply don’t represent good value for money on a per-share basis.
So, in this article, we’ve put together three of the best hydrogen stocks for investors to add to their watchlist based on a range of criteria. Here are some companies to consider.
Linde (LIN)
Linde (NASDAQ:LIN) is recognized for contributing to the hydrogen and fuel cell market. It focuses on clean hydrogen and zero-emission fuel cell solutions.
LIN stock has consistently improved its hydrogen production in the United States and overseas. It recently expanded its production with an enhancement to an existing site located in McIntosh, Alabama. This expansion increases the plant’s production capacity of liquid hydrogen to 30 tons per day, resulting in an investment of approximately $90 million.
Wall Street analysts have formed a consensus agreement on Linde stock, rating it a “Strong Buy”. Furthermore, they expect its share to rise 3.36% over the next twelve months. These factors then make LIN one of those hydrogen stocks to consider.
Chevron (CVX)
Chevron (NYSE:CVX) operates facilities for wind power, hydrogen and carbon capture, making it a key player in the hydrogen sector.
Although not a pure-play hydrogen option like other hydrogen stocks on the list, CVX is a blue-chip company paying substantial dividends and has incredible free cash flow. It’s also gradually pivoting from an oil stock to one focused on carbon-free solutions like hydrogen.
The company produces around 1 million tons of hydrogen annually and spends $1 billion annually to reduce carbon emissions. Enhancing this effort is its acquisition of a major stake in the world’s largest proposed hydrogen storage facility, ACES Delta, in Utah this year.
CVX presents a compelling alternative option, with a 4% dividend yield and an implied upside of 25.15% for its share over the next twelve months.
Air Products and Chemicals (APD)
Air Products and Chemicals (NYSE:APD) specializes in serving various industries with solid-oxide fuel cell systems.
APD is my contrarian pick for investors to pick up potentially undervalued shares. The stock slipped around 13% amid posting its fourth-quarter results. The company reported declining Q3 revenues year-over-year, missing estimates, but exceeded earnings expectations. Specifically, APD faced sales drops across various regions, including significant challenges in Asia, due to China’s slow recovery and reduced demand for electronics.
However, despite current setbacks, APD forecasts a 13% growth in adjusted EPS for fiscal 2024. Wall Street also seems to agree that the company’s shares will rise in the short term. The trailing PE ratio is 26.22 and the forward PE ratio is 20.67, implying that its earnings will rise.
This situation gives investors a good tradeoff between risk and reward, which makes APD one of those hydrogen stocks to buy.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.