5 Hydrogen Stocks to Watch

While the hydrogen industry has been held back by rising costs and lagging policies, the alternative energy source is expected to increase its share of the energy mix over the next few decades. Here is a collection of stocks poised to benefit from rising demand for hydrogen.

• ITM Power is making “tangible progress” on its turnaround plan following a profit warning in January.
• Ceres Power increased its investment in hydrogen and related technologies by 19% in the first six months of the year.
• Ballard Power Systems is supporting the roll-out of hydrogen-fuelled buses in Europe.

Plug Power

The Positive Guidance Stock

Shares in Plug Power [PLUG] got a jolt last week after the hydrogen fuel specialist updated investors on its business outlook. The company is expected to bring in $1.2bn in revenue in 2023 — up from $701.4m in 2022 — a figure that is forecast to jump to $6bn by 2027 and $20bn by 2030. On 11 October the company was named as the preferred electrolyser supplier for Fortescue’s [FMG.AX] Gibson Island Project in Brisbane, Australia, which will, upon completion, supply 385,000 tonnes of green ammonia per year from green hydrogen. “The deal reinforces Plug’s established leadership position in deploying electrolyser solutions at a global scale,” said CEO Andy Marsh.

ITM Power

The Turnaround Plan Stock

Hydrogen energy equipment maker ITM Power [ITM.L] has been under pressure since a profit warning in January, but it is showing signs of a turnaround. Full-year results published for fiscal year 2022/23 ending 30 April met expectations, and, despite losses widening, the company emphasised that its “rigorous approach to capital allocation and cost management” will allow it to invest more heavily in important areas, including engineering and manufacturing. CEO Dennis Schulz hailed the “tangible progress” it was making on its transformation journey.  

Ceres Power

The R&D Investment Stock  

Losses at Ceres Power [CWR.L] widened in the first half of the year, from £22.6m to £26.4m, as the fuel cell specialist ramped up its R&D spending. Capital investment in hydrogen and green technologies — what it calls “investment in the future” — increased 19% year-over-year to £30.6m for the six months to 30 June. The company is making “rapid progress in the development of our game-changing electrolyser technology”, said CEO Phil Caldwell in the earnings report released in August.

Ballard Power Systems

The Green Transport Stock 

Canadian fuel cell manufacturer Ballard Power Systems [BLDP] is supporting the roll-out of hydrogen-fuelled transport in Europe. In September, the company received a purchase order from bus manufacturer Solaris Bus & Coach for 177 hydrogen fuel engines. The majority of these will be shipped between 2024 and 2026, with 127 destined for Bologna, Italy. “There is growing interest in Europe for larger deployments of zero-emission, fuel cell electric buses that offer range, refuelling time and operating rhythm consistent with legacy diesel bus experience,” said Ballard’s chief commercial officer David Mucciacciaro.

SFC Energy

The India Expansion Stock 

German fuel cell manufacturer SFC Energy [F3C.DE] announced in July that it has launched hydrogen and methanol fuel cell production in India. “As the world’s most populous country, India is the market with the highest growth dynamics in Asia for this technology, which can contribute not only to climate protection but also to air improvement,” said SFC Energy CEO Peter Podesser. The partnership with FC TecNrgy is expected to bring in €100m in revenue in the medium term, while current orders are worth €33m.

Another Way to Invest in Hydrogen

The Global X Hydrogen ETF

ETFs, or exchange-traded funds, offer an economical and diversified way to invest in a variety of stocks within a particular theme.

The Global X Hydrogen ETF [HYDR], which holds all five stocks, allocated 80.7% of its portfolio to industrials and 11.9% to consumer discretionary as of 30 September. Materials and information technology (IT) have weightings of 6.1% and 1.3%, respectively. As of 13 October, the fund was down 37.8% year-to-date and down 33% in the past six months.

The L&G Hydrogen Economy UCITS ETF [HTWO.L] also holds all five stocks. As of 31 August, industrials and materials accounted for 45% and 35% of the portfolio, respectively. The other three categories in the fund were consumer discretionary (11.4%), IT (5%) and utilities (2.6%). The fund was down 13% year-to-date and down 15.3% in the past six months.