5 Hydrogen Stocks to Watch

Demand for hydrogen is expected to swell in the long term, but there are some growth challenges to be overcome. Here is a collection of stocks to watch in the near term.

• Ceres has issued a full-year revenue warning amid delays to deals being signed.
• Plug Power is concerned about its ability to keep operating as it haemorrhages cash.
• Bloom Energy is something of an outlier, reporting record revenue for Q3 2023.

AFC Energy

The Ammonia-to-Hydrogen Stock

AFC Energy [AFGYF] announced on 4 December that it had conducted the world’s largest ever ammonia-to-hydrogen modular cracker demonstration. The cracker system splits ammonia into hydrogen and nitrogen. It has the potential to produce 140 tonnes of fuel cell-grade hydrogen per year at a rate of 400kg per day. CEO Adam Bond hailed the successful test as “a major step forward in unlocking the barriers of hydrogen logistics and transport”. It’s expected that the cracker system will eventually become a standalone product sold to hydrogen customers.

Ceres Power

The Revenue Warning Stock

Ceres Power [CWR:L] saw its share price deflate to a 52-week low on 1 December after warning that new deals are “now unlikely to be signed in time for the associated revenue to be recognised in 2023”. The company is, however, currently in discussions with a number of potential licensing partners. Full-year revenue is expected to be between £20–21m, down from approximately £22m in 2022. Following a sharp selloff in the few days following the regulatory news, the Ceres Power share price is down 9.6% in the past month and down 54.3% over the past year.

Plug Power

The Cash Burn Stock

Plug Power [PLUG] issued a stark warning in early November that there is “substantial doubt about the company’s ability to continue as a going concern” given its cash burn rate and “unprecedented supply chain challenges” that have led to “severe” hydrogen shortages. The regulatory release came just a few weeks after the fuel cell-maker boosted its long-term revenue outlook. Having accumulated a deficit of $3.8bn as of 30 September, the Plug Power share price has tumbled 46.8% in the past two months and 70% over the past year.

Bloom Energy

The Record Revenue Stock

Bloom Energy’s [BE] third-quarter earnings were something of an outlier within the solar sector. Revenue was $400.3m, up 36.9% from the $292.3m reported in Q3 2022, making this one a record quarter. CEO KR Sridhar said in the earnings release that the company “is executing at a high level on innovation and growth”. Demand for Bloom’s energy servers with heat capture capabilities has been rising as data centres seek more efficient ways to handle and process vast amounts of data.

McPhy Energy

The Alkaline Electrolyser Stock

McPhy Energy [MPHYF] announced in October that it’s to collaborate with Estonian energy firm Stargate Hydrogen on ‘alkaline electrolyser’ electrodes. Using Stargate’s technology, McPhy will look to improve the reliability of alkaline electrolysis systems. “Sharing the same technological and industrial challenges, this cooperation allows us to cross-fertilise our expertise to sustain the development of electrolysers,” commented McPhy CEO Jean-Baptiste Lucas in a press release.

Another Way to Invest in Hydrogen

The Global X Hydrogen ETF

The Global X Hydrogen ETF [HYDR] holds all five stocks. As of 30 November, 83.3% of the portfolio has been allocated to industrials, while consumer discretionary has a 12.1% weighting. Materials account for 4.7%. The fund is down 45.5% in the past year through 8 December and down 29.5% in the past six months.

The Defiance Next Gen Hydrogen ETF [HDRO] also holds all five stocks. As of 30 September, hydrogen fuel cells account for 54.6% of the portfolio, while hydrogen tech and fuelling stations and hydrogen production have weightings of 26.2% and 19.2% respectively. The fund is down 39% in the past year and down 28.4% in the past six months.