Hydrogen energy is emerging as a critical component in the transition to a low-carbon economy. These companies are making significant strides in hydrogen technology that could send hydrogen stocks skyrocketing.
These hydrogen stocks’ low-valuation ratios indicate potential undervaluation, considering the stock price relative to earnings and other financial metrics. The lower valuation ratios for these hydrogen stocks suggests a favorable entry point for investors amid the growing hydrogen market.
So here are the best hydrogen stocks to buy for potentially multibagger returns.
Bloom Energy (BE)
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Bloom Energy (NYSE:BE) is known for its solid-oxide fuel cells and offers a variety of combustion-free, highly efficient and carbon-neutral products. There’s good reason to believe that BE stock could offer investors skyrocketing returns in the future.
Bloom Energy surpassed analyst expectations in Q3 2023 with earnings of $0.15 per share and record sales of $400.3 million. However, the company experienced a substantial loss under GAAP, with operating losses doubling yearly and a negative gross profit margin.
The company saw these losses and a 150% increase in GAAP loss per share compared to last year. However, it expects to end the year with $1.4 to $1.5 billion in sales.
Based on its low valuation ratios, BE stock could be considered undervalued. It has a 2.06 Price to Sales Ratio, which is modest for a company in the renewable energy sector. Additionally, the forward Price to Sales ratio of 1.64 indicates expectations of increasing sales. The significant revenue growth forecast of 28.82% over the next five years suggests potential for future profitability.
Ballard Power (BLDP)
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Ballard Power (NASDAQ:BLDP) is recognized for its zero-emission proton exchange membrane fuel cells, which are used in commercial vehicles and marine vessels. BLDP shows signs of volatility as a disruptive startup as well as indications that it has huge potential.
Ballard Power Systems’ Q3 report showed a significant increase in revenue, driven by demand in the heavy-duty mobility sector. Despite a reported net loss due to restructuring changes, the company is well positioned moving forward thanks to its substantial order backlog and strategic partnerships.
Analysts view BLDP stock with cautious optimism due to its consistent ability to outperform the industry-average EPS estimates. While sales forecasts have been less consistent, there’s a positive outlook for the next quarter with an anticipated increase. Current analyst ratings are mixed, but the average price target over the past three months suggests potential upside.
Plug Power (PLUG)
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Plug Power (NASDAQ:PLUG) specializes in providing clean hydrogen and zero-emission fuel cells for both stationary and electric mobility applications. Although PLUG is a risky pick, luck and solid analysis could lead to a huge upside due to its discounted valuations.
Plug Power experienced a sharp decline after reporting lower-than-expected Q3 earnings and a significant quarterly loss. These earnings raised concerns about its hydrogen supply and profitability timeline. Despite these setbacks, the company is ambitiously aiming for profitability within a few years.
Plug Power CEO Andy Marsh views the recent “going concern” warning as an accounting formality and actively seeks solutions. The company plans to raise $500 million to $600 million to address the cash shortfall projected for the next year. Strategies to continue its operations include borrowing against inventory, selling hydrogen assets and exploring government loans.
However, concerns that Plug’s financial reserves may deplete before these plans materialize has prompted caution about its ability to continue operations without additional funding.
Still, with a price-to-sales ratio of just two times earnings, PLUG may be significantly undervalued if it manages to turn its fortunes around, thus giving investors potentially multibagger potential.
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.
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