A reliable source of energy is crucial in today’s fast-paced world. When choosing between energy sources, a tradeoff between sustainability and efficiency occurs. What if I told you there is a way for our energy to be both efficient and sustainable?
Hydrogen energy is the answer. Although its employment at a large scale has yet to happen, hydrogen energy has the potential to be one of the most prominent, if not the most prominent, energy sources in the future. Currently, dozens of companies are dedicated to bringing hydrogen to mainstream usage. Below are the three most promising hydrogen stocks to watch now.
BP (NYSE:BP) is one of the largest energy companies in the world. One of the segments it has developed most recently is the hydrogen energy segment. BP is a leader in the hydrogen space and is continuing to rapidly grow. Through its HyGreen Teesside & H2 Teesside projects, BP is on track to produce 500 MW of green hydrogen and 1 GW of blue hydrogen by 2030, which alone meets 15% of the United Kingdom’s hydrogen target. BP also has over 10 other hydrogen projects internationally, gaining market share and improving on existing technology.
BP’s financials support a buy thesis. First of all, it is extremely undervalued. BP has a P/E ratio of 4.08x, showing massive potential for growth. The company also has an impressive return on equity of around 30%, in comparison to an industry average of around 17%. This has led to the company’s impressive earnings growth rate, which supplements its solid profit margins above 10%.
New Fortress Energy (NFE)
New Fortress Energy (NASDAQ:NFE) is a small hydrogen company with significant growth potential. The company has already started working on expanding a hydrogen energy facility in Texas, and has involved itself in numerous projects to reach its goal of removing carbon emissions and being at the forefront of emission-free energy.
Its financial statements also back up a buy thesis.
New Fortress Energy has consistently reported strong and steady revenue of over $500 million, although its revenue slightly slipped to $515 million in Q3 from $560 million in Q2. The company has also consistently turned large profits. In the most recent quarter, it reported over $60 million in net income, and in the preceding quarter, $120 million. The company’s profits shield it from having to borrow in a high-interest-rate environment and allow it to continue building new factories and working on new hydrogen projects.
Linde (NASDAQ:LIN) is a leader in the hydrogen space with strong growth prospects. It uses its developments in hydrogen energy to reach different industries and geographical areas, whether it be by owning the biggest hydrogen stations in the U.K. or investing $1.8 billion to provide clean hydrogen energy to customers in the U.S. Gulf Coast.
Linde is also one of the biggest hydrogen companies by market capitalization, currently valued at nearly $200 billion. The company’s size allows it to more fiercely invest and develop new technologies, giving it an upper hand in innovation. It is also extremely profitable, with a profit margin of 19% in the past quarter, allowing it to reinvest large earnings into the growth of the company.
On the date of publication, Tomas Levani did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com