Recently, the performance of US green hydrogen stocks and Exchange-Traded Funds (ETFs) has not been impressive. However, for renewable energy investors who adhere to a buy-and-hold investment strategy, this has created a rare contrarian buying opportunity. The reason for optimism in US green hydrogen stocks and ETFs is simple: despite the headwinds like relatively low oil and gas prices, high interest rates, supply chain and inflation issues, the overall trend of clean energy transition remains unchanged. Therefore, patient investors are expected to reap significant rewards in the long run.
Furthermore, against the backdrop of accelerated development in electric vehicles, reshoring of manufacturing, and rapid expansion of AI-driven data centers, there is forecasted to be explosive growth in power demand. The International Energy Agency (IEA) recently released its “2024 Electricity Report,” indicating a projected acceleration in global power demand over the next three years. However, it is expected that this increased demand will be met by clean energy technologies. Hydrogen obtained through renewable sources such as solar, wind, and hydroelectric power by water electrolysis is termed green hydrogen, representing a form of clean energy.
If you are interested in investing in green hydrogen, the following 6 US green hydrogen stocks and ETFs are worth considering:
Bloom Energy Corp. (NYSE:BE) is involved in two key pillars of the green hydrogen industry: fuel cells and electrolyzers, making it a blue-chip stock in the green hydrogen sector. Bloom’s fuel cell systems can operate on hydrogen, biogas, and natural gas, thereby expanding the company’s market scope and flexibility. Additionally, the company’s technology can be applied in the utility and transportation industries, both of which are under significant decarbonization pressure. The increasing instability of the grid and capacity constraints will further drive the development of fuel cell manufacturers, and the value of Bloom Energy in addressing data center power issues has yet to be fully realized in the market.
Plug Power Inc. (NASDAQ:PLUG) manufactures hydrogen fuel cells for fuel cell electric vehicles (FCEVs), another blue-chip player in the US green hydrogen sector. The company’s clients include major retailers such as Amazon.com (NASDAQ:AMZN), Walmart (NYSE:WMT), and Home Depot (NYSE:HD), all of which utilize Plug Power’s fuel cell-powered forklifts in their warehouses.
Similar to Plug Power, Ballard Power Systems (NASDAQ:BLDP) is a decarbonized transportation concept stock. The company produces fuel cells for buses, commercial trucks, trains, ships, passenger vehicles, and forklifts, especially proton exchange membrane (PEM) fuel cells. PEM fuel cells have outstanding advantages such as quick start and operation at low temperatures, minimal solid-state electrolyte loss, long lifespan, and high power-to-energy ratio, making them widely applicable, especially in automotive and portable applications.
With a market capitalization of $8.8 billion, KBR Inc. (NYSE:KBR) is not strictly a hydrogen stock. It is a world-leading ammonia process licensor, but the solutions and technology it offers can be used to produce green ammonia as a long-term energy storage medium, with a market share as high as 50%. Ammonia possesses significant advantages in storage and transportation compared to hydrogen, making green ammonia a potential solution for long-distance hydrogen transport challenges. With the support of IRA, KBR’s technology will play a crucial role in the development of green hydrogen with the launch of regional hydrogen hubs.
Given that the green hydrogen industry is still in its early stages and companies are relatively small, with recent lackluster trends in green hydrogen stocks, risk-averse investors can opt for green hydrogen ETFs, such as the Global X Hydrogen ETF (HYDR). HYDR’s holdings are highly diversified, covering different industries and regions, with the majority of holdings coming from the industrial sector. Bloom, Plug Power, and Ballard all rank among the top five holdings, with an expense ratio of 0.5%.
The companies in Direxion Hydrogen ETF (HJEN) are involved in hydrogen generation and production, storage and supply, batteries and fuel cells, systems and solutions, as well as membranes and catalysts. Top holdings include established hydrogen enterprises such as L’Air Liquide SA (OTC:AIQUY), as well as major fossil fuel producers Shell (NYSE:SHEL) and BP (NYSE:BP). Bloom, Plug Power, and Ballard also rank among the top five holdings, and the ETF’s holdings cover 12 countries, with an expense ratio of 0.45%.
