Hydrogen Powerhouses: Our 3 Top Stock Picks From the Sector

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Hydrogen stocks could get explosive if President Biden loosens hydrogen tax credits, which are currently seen as too restrictive. For one, Plug Power (NASDAQ:PLUG), for example, expects the restrictions to be loosened.

Two, according to E&E News, all seven of the Department of Energy’s hydrogen hubs are asking the Treasury Department to loosen the rules, too. They argue that the Treasury guidance is ‘overly restrictive’ and would prevent many of the hubs’ projects from being realized. DOE plans to fund the regional hubs with $7 billion from the climate law.”

In addition, nuclear and hydropower companies are asking the Biden Administration to allow “as much as 20% of low-emitting power plants today to qualify for a lucrative tax credit intended to spur growth of hydrogen production without causing power grid emissions to spike,” as noted by Bloomberg Law.

If the current rules are loosened, hydrogen stocks could easily explode higher. In fact, here are three hydrogen stocks you may want to consider buying ahead of any potential rule-loosening.

Air Products and Chemicals (APD)

Air Products (APD) logo on the Arts Quest building, Air Products is a sponsor of Air Products Town Square at Arts Quest in Bethlehem, PA

Source: Andy Borysowski / Shutterstock.com

Just a few days ago, I mentioned, “After gapping form about $256 to about $212, Air Products and Chemicals (NYSE:APD) is starting to pivot from oversold RSI, MACD, and Williams’ %R. From its current price of $228.09, I’d eventually like to see it refill its bearish gap around $256 again shortly. As we wait for the company to recover, we can collect its dividend”

For those that do not know, Air Products and Chemicals specializes in, well, air products and chemicals. They sell gases and chemicals such as hydrogen for industrial use. The company is based in Pennsylvania and has been in business since the 1940s.

Today, APD is just starting to pivot higher, last trading at $231.73. From here, I believe it can refill its bearish gap around $255. Plus, analysts at Bank of America just upgraded APD to a “Buy” rating, noting the company has “an attractive valuation, a stable business and significant growth potential from clean-energy projects,” as reported by Seeking Alpha.

Plug Power (PLUG)

Person holding mobile phone with logo of American hydrogen fuel cell company Plug Power Inc. (PLUIG) on screen in front of webpage. Focus on phone display. Unmodified photo.

Source: T. Schneider / Shutterstock.com

Plug Power (NASDAQ: PLUG) is also attempting to pivot higher. After catching support just under $3, PLUG is now up to $3.55. If it can break above $4.50, it could potentially test $5 again. Plug Power is reinventing the wheel by bringing hydrogen batteries in as a replacement for the common conventional batteries you see in vehicles.

As a captain of their industry, Plug Power often hosts informationals and webinars to discuss the future of hydrogen power. If you are interested, they have another event scheduled for March 5.

Fueling upside, the company just expanded its partnership with Uline to “deploy Plug’s hydrogen infrastructure and fuel cell solutions at Uline’s campus in Kenosha, Wisconsin,” as noted in a company press release. Better, analysts at Truist just raised their price target on PLUG to $7 a share from $6.

FuelCell Energy (FCEL)

Person holding cellphone with logo of US fuel cell company FuelCell Energy Inc. (FCEL) on screen in front of business webpage. Focus on phone display. Unmodified photo.

Source: T. Schneider / Shutterstock.com

We can also take a look at FuelCell Energy (NASDAQ:FCEL), which just bounced off triple-bottom support to $1.24 a share. From here, if it can break above $1.50 resistance, it could potentially test $1.85 again shortly. Helping, the company just received a binding purchase order from Exxon Mobil’s (NYSE:XOM) Esso Nederland for fuel cell modules.

“FuelCell Energy and ExxonMobil believe that capturing carbon at the source is an efficient way to decarbonize heavy industry. This technology can capture carbon and produce electricity simultaneously, making it a game-changer in the industry,” said FuelCell Energy President and Chief Executive Officer Jason Few in a company press release.

In addition, as noted by Investorplace contributor Alex Sirois, “FuelCell Energy’s losses continue to narrow both on an annual level and every quarter. The company has more than $403 million in cash and reported a net loss of $108.1 million in 2023 overall. It also has a backlog of orders valued are more than $1 billion. Without any further funding, it can continue to pursue the fulfillment of that backlog, likely for four years or more. That makes it an interesting investment overall.”

On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.

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The post Hydrogen Powerhouses: Our 3 Top Stock Picks From the Sector appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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