In this article, we discuss 11 best hydrogen and fuel cell stocks to buy. If you want to skip our detailed analysis of the hydrogen and fuel cell market and check the top stocks in the sector, check out 5 Best Hydrogen and Fuel Cell Stocks To Buy.
As per the International Energy Agency’s “Global Hydrogen Review 2022”, the demand for hydrogen reached 94 million tonnes in 2021, up from the pre-pandemic demand of 91 million tonnes in 2019. Majority of the higher hydrogen demand stems from traditional uses, such as refining and industrial applications. New steel projects are being declared swiftly, just one year after the successful demonstration of utilizing hydrogen in direct reduction of iron. Hydrogen fuel cell-powered trains are now running in Germany, and there are hundreds of on-going projects that are testing the use of hydrogen and hydrogen derivatives in shipping and the power sector. Hydrogen has the potential to create 3.5 GW power by 2030. IEA forecasts that hydrogen demand could skyrocket to 115 million tonnes by 2030, and about 2 million tonnes would be attributed to new applications. Around 200 million tonnes of hydrogen is required by 2030 to meet the net zero emissions goal by 2050.
According to GlobalData, a renowned data and analytics company, the global production capacity of green hydrogen exceeded 109 kilo tons per annum (ktpa) in 2022. This indicates an impressive growth of 44% when compared to 2021. In February 2023, Andres Angulo, Energy Analyst at GlobalData, said:
“During 2022, over 393 deals related to hydrogen were closed, representing a significant increase compared to 277 deals registered in 2021. This shows an upward trend in the low-carbon hydrogen market development, which could be decisive in achieving over 111 million tons per annum (mtpa) capacity worldwide by 2030. However, the partnerships represented 66% of the deals last year, and the number of deals decreased after Q2 2022 to numbers even below those seen in the same quarter in 2021. This could have been due to the companies trying to strengthen their core business and diversify the investment risk given the global economic situation.”
Hydrogen fits seamlessly with the vision of the big oil companies, given their control and expertise over natural gas operations and a robust financial position after an extremely profitable year in 2022. Massive funding and experience in dynamic project management will allow the existing oil and gas giants to transition into hydrogen as an energy source. The most feasible plan is to manufacture portable liquid hydrogen and supply clean power to travel, logistics, steel, and chemical industries. Hydrogen is exceedingly popular in the aircraft industry, as they grapple to lower their carbon emissions and achieve net-zero carbon by 2050. CNBC cited Martha Neubauer, senior associate at AeroDynamic Advisory, who said:
“Airbus has been looking at hydrogen for a long time and recently, within the last years, has increased that focus. Looking at both hydrogen fuel cells and hydrogen combustion.”
Some of the best hydrogen stocks to invest in include Linde plc (NYSE:LIN),DuPont de Nemours, Inc. (NYSE:DD), and Chevron Corporation (NYSE:CVX).
Our Methodology
We selected the following hydrogen and fuel cell stocks based on the hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
Plug Power Inc. (NASDAQ:PLUG) caters to supply chain and logistics, electric vehicles, and stationary power applications, providing clean hydrogen and fuel cell solutions. On June 7, Plug Power Inc. (NASDAQ:PLUG) announced that it will supply 8 MW of hydrogen fuel cell stationary power for the generation of clean energy, in collaboration with Energy Vault Holdings, Inc. (NYSE:NRGV). Plug Power announced this will be the biggest hydrogen powered fuel cell installation in the United States. It is one of the best hydrogen stocks to watch.
On May 22, Piper Sandler analyst Kashy Harrison maintained a Neutral rating on Plug Power Inc. (NASDAQ:PLUG) but trimmed the firm's price target on the shares to $8 from $10. The first quarter earnings seasons for Piper Sandler’s renewable and alternative energy coverage "was a rollercoaster" that included "high profile beats, misses, unexpected capital markets activity, and domestic content guidance," which lends an optimistic outlook to the sector, the analyst told investors.
According to Insider Monkey’s first quarter database, 23 hedge funds were bullish on Plug Power Inc. (NASDAQ:PLUG), compared to 25 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 5 million shares worth $59 million.
In addition to Linde plc (NYSE:LIN),DuPont de Nemours, Inc. (NYSE:DD), and Chevron Corporation (NYSE:CVX), Plug Power Inc. (NASDAQ:PLUG) is one of the best hydrogen stocks to invest in.
New Fortress Energy Inc. (NASDAQ:NFE) operates as an integrated energy infrastructure company that primarily uses natural gas for power generation. The company also aims to provide carbon-free power by using hydrogen instead of fossil fuels. New Fortress Energy Inc. (NASDAQ:NFE) is one of the best hydrogen stocks to invest in.
On April 10, Deutsche Bank analyst Chris Robertson initiated coverage of New Fortress Energy Inc. (NASDAQ:NFE) with a Buy rating and a $60 price target. The analyst thinks there will be higher global demand for liquefied natural gas in the near future, which has the possibility to create "outsized investment opportunities."
According to Insider Monkey’s first quarter database, 28 hedge funds were bullish on New Fortress Energy Inc. (NASDAQ:NFE), compared to 43 funds in the prior quarter. Michael Novogratz’s Fortress Investment Group is the largest stakeholder of the company, with 13.4 million shares worth $394.3 million.
Bloom Energy Corporation (NYSE:BE) designs, manufactures, commercializes, and installs solid-oxide fuel cell systems for power generation in the United States and internationally. On June 7, Bloom Energy Corporation (NYSE:BE) signed an agreement with Perenco, a UK-based hydrocarbon company, to install 2.5 MW of Bloom's solid oxide fuel cells in England. This will mark Bloom Energy Corporation (NYSE:BE)’s entrance in the UK fuel cell market.
On May 24, BMO Capital maintained a Market Perform rating on Bloom Energy Corporation (NYSE:BE) but lowered the firm's price target on the shares to $18.50 from $22. According to the firm, the recent analyst day presentation showed the potential opportunities for Bloom Energy Corporation (NYSE:BE)’s primary stationary power product. BMO Capital believes that there is room for growth in this field due to the rising limitations of grid power.
According to Insider Monkey’s first quarter database, 29 hedge funds were bullish on Bloom Energy Corporation (NYSE:BE), compared to 24 funds in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the biggest stakeholder of the company, with 2.5 million shares worth nearly $50 million.
ClearBridge Investments made the following comment about Bloom Energy Corporation (NYSE:BE) in its Q3 2022 investor letter:
“We were active in repositioning the portfolio in the quarter as market crosswinds opened idiosyncratic opportunities, adding two new industrial companies. Bloom Energy Corporation (NYSE:BE) is an electrical equipment company that makes solid-oxide fuel cell systems for on-site power generation, serving a variety of industries. Its fuel cells convert natural gas, biogas or hydrogen into baseload (non-intermittent) electricity without combustion, so there is low or no carbon emission. We expect significant upside through its ability to support the growing hydrogen economy, with a large opportunity for this in South Korea and meaningful policy support in the U.S. via the IRA, while other markets include biogas, carbon capture and marine transportation. Its natural gas energy server business is growing in the U.S. amid higher grid reliability concerns.”
Cummins Inc. (NYSE:CMI) manufactures and designs diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. The company offers electrified power systems with components and subsystems, including battery, fuel cell, and hydrogen production technologies.
On May 2, Cummins Inc. (NYSE:CMI) reported a Q1 GAAP EPS of $5.55 and a revenue of $8.45 billion, outperforming Wall Street estimates by $0.77 and $320 million, respectively. Cummins Inc. (NYSE:CMI) also distributed a $1.57 per share quarterly dividend to shareholders on June 1.
According to Insider monkey’s first quarter database, 38 hedge funds were bullish on Cummins Inc. (NYSE:CMI), compared to 33 funds in the preceding quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with 2.05 million shares worth $491.4 million.
BP p.l.c. (NYSE:BP) is primarily involved in the production of natural gas, onshore and offshore wind power, hydrogen and carbon capture facilities, and crude oil. It is one of the top hydrogen stocks to invest in. On May 2, BP p.l.c. (NYSE:BP) declared a $0.3966 per ADS dividend, same as February’s dividend announcement. The dividend is payable on June 23, to shareholders of record on May 12.
On May 4, Credit Suisse analyst Amy Wong maintained a Neutral rating on BP p.l.c. (NYSE:BP) and lowered the firm's price target on the shares to 610 GBp from 630 GBp.
According to Insider Monkey’s first quarter database, 41 hedge funds were long BP p.l.c. (NYSE:BP), compared to 37 funds in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of the company, with 7 million shares worth $267.25 million.
Shell plc (NYSE:SHEL) is an energy and petrochemical company that provides crude oil, natural gas, and natural gas liquids, in addition to producing and selling hydrogen. Shell plc (NYSE:SHEL) is one of the best hydrogen stocks to watch. On May 4, the company declared a quarterly dividend of $0.575 per ADS, in line with previous. The dividend is payable on June 26, to shareholders of record on May 19.
On June 6, Deutsche Bank analyst James Hubbard placed a "Catalyst Call: Buy" Shell plc (NYSE:SHEL), categorizing the stock as a short-term investment idea, citing long-term attractive valuation and a strong market position, as well as a crucial role in enabling decarbonization.
According to Insider Monkey’s first quarter database, 41 hedge funds were long Shell plc (NYSE:SHEL), compared to 40 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is the biggest stakeholder of the company, with 12.8 million shares worth $737.3 million.
Like Linde plc (NYSE:LIN),DuPont de Nemours, Inc. (NYSE:DD), and Chevron Corporation (NYSE:CVX), Shell plc (NYSE:SHEL) is one of the hydrogen stocks that smart investors are piling into.
Artisan Global Equity Fund made the following comment about Shell plc (NYSE:SHEL) in its Q4 2022 investor letter:
“We scaled back our weighting in clean energy this quarter, which is a part of the portfolio’s environment theme, to take profits after a successful run in 2022. We did so by trimming our position in Shell plc (NYSE:SHEL), a stock we added to the portfolio in Q1 2022. As an integrated energy company, approximately one third of Shell’s revenues come from transition fuels, such as LNG, and another third comes from new energy sources such as green hydrogen. LNG is one of the cleanest fossil fuels and represents a potential bridge to the future by replacing higher carbon energy sources with lower carbon ones while renewable technologies mature. As the largest LNG supplier in the world, we believe Shell is particularly well-positioned to help Europe meet its energy needs as it looks for ways to replace imported Russian oil and gas with new sources after the embargo.”
