A recent analyst report shows that burning fossil fuels produces about 83% of the world’s carbon emissions. Governments worldwide are attempting to shift focus to more renewable energy sources as the ongoing political and social conflicts surrounding the climate problem only seem to grow. The study also predicts that green hydrogen will lead the decarbonization effort and play a crucial part in enabling a complete transition to net zero by 2050. No more nasty emissions! Zilch. Natural gas output is anticipated to be 70% lower, and oil production will likely be down more than 55% from where it is now by 2050. Coal? Doesn’t stand much of a chance.
In a continuous attempt to decarbonize heavy industries, long-haul freight, shipping, and aviation, green hydrogen has been funded with various emissions reduction pledges from the UN Climate Conference, also popularly called “COP 26.” The Green Hydrogen Catapult, the Inflation Reduction Act, and other legislative initiatives by the European Commission aim to provide secure, clean energy on a global scale by decarbonizing the gas market using renewable sources. If you were asked which renewable energy source is the best to use and you answered with “green hydrogen,” then by all accounts, you’d most likely be correct. As investors, we know that renewable energy is buzzing and gaining popularity. For now, I’m going under the radar with green hydrogen stocks to show off a few of the industry’s greatest.
Let’s get into the three green hydrogen stocks I picked; I’ve accounted for performance, recent events and developments, growth, analyst sentiment, and what a stock’s intrinsic value could be. Experts agree that we should grab these hydro-tickers:
Shell PLC (SHEL)
Shell PLC (SHEL) is an oil and petrochemical business with operations in Europe, Africa, Asia, the U.S., and the rest of North and South America. SHEL extracts natural gas, crude oil, and natural gas liquids, markets and transports such resources, and runs the upstream and midstream infrastructure required to give gas directly to the market. SHEL also markets and trades energy, carbon-emission rights, and LNG as fuel for heavy-duty vehicles. Furthermore, SHEL manufactures basic chemicals ranging from basic aromatics to detergent alcohols. SHEL also generates power using wind and solar energy, produces and sells hydrogen, and offers electric car charging services (as well as electrical storage). In January 2022, the business changed its name from Royal Dutch Shell PLC to Shell PLC. SHEL was established in 1907 and is based in London, England.
Since 2015 — after shifting its focus from greenhouse gasses — SHEL has been gradually implementing a sustainable energy transition, investing heavily in wind and solar power, green hydrogen generation, and reforestation. SHEL aspires to be a net-zero-emissions energy company by 2050. SHEL is doing quite well, with 39 hedge funds currently holding approximately twenty million shares, equaling roughly $1 billion. SHEL now has a P/E ratio of 5.02x, and a decent 0.68 beta, making it less volatile than the broader market. To showcase its Q3 2022 performance, I’ll lean on my new approach by listing the year-over-year growth with what’s reported: Revenue – $95.75 billion (+59.46%), Net Income – $6.74 billion (+1,608%), EPS – (+1,633%), and Profit Margin – 7.04% (+1,051%). SHEL beat Wall Street analysts’ Q3 revenue projection by a margin of 103.78%. SHEL has a dividend yield of 4.29%, with a quarterly payout of 62 cents per share ($2.48 a year). Analysts that offer annual price estimates give SHEL a consensus median price target of 70.00, with a high of 78.70 and a low of 60.00. The assessment is a 21.94% increase over current pricing; it gives us another excuse to take advantage of SHEL’s buy rating.
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Linde PLC (LIN)
Linde PLC (LIN) is an industrial gas and engineering firm with operations in North and South America, the Middle East, Africa, Europe, and Asia Pacific. LIN provides atmospheric gases like oxygen, argon, nitrogen, and rare gases. In addition, LIN designs and builds turnkey process plants for third-party clients and gas shops, promoting several varieties, such as olefin, natural gas, hydrogen, and synthesis gas facilities. LIN has been involved in other business sectors: healthcare, energy, manufacturing, food, beverage carbonation, fiber optics, steel manufacturing, aerospace, chemicals, and water treatment. LIN was formed in 1879 and is headquartered in Woking, England.
There is an active Hydrogen Council of which LIN is a member. LIN has invested in wind-powered plants that transform water into hydrogen and has predicted that by 2035, hydrogen vehicles will likely be competitive with EVs. LIN started producing green hydrogen on a large scale in France, Greece, and other European nations as of November 2022. Of course, LIN is a favorite of mine for timely events, but it also shows excellent past performance. From Q4 2021 to Q3 2022, LIN bested analysts’ projections on both lines; for four consecutive quarters. Here are LIN’s Q3 financials with corresponding yearly growth: Revenue – $8.8 billion (+14.72%), Net Income – $1.27 billion (+30.03%), EPS – $2.54 per share (+35.11%), and Profit Margin – 14.47% (+13.31%).
LIN has a dividend yield of 1.40%, with a quarterly payout of $1.17 ($4.68 annually). Analysts who offer yearly price projections have given LIN a median price target of 350.00, with a high of 380.00 and a low of 260.00. This is a 4.69% increase from the last price, and speaking of price—LIN’s buy rating holds up because it is considered undervalued, making the price a bargain. It’s hard not to like this one.
Plug Power Inc (PLUG)
Plug Power, Inc. (PLUG) specializes in developing, designing, and manufacturing hydrogen and fuel cell systems for handling materials and stationary energy storage sectors. PLUG’s fuel cell system solutions are intended to replace lead-acid batteries in some distribution and manufacturing enterprises’ electric vehicles, as well as industrial trucks. George C. McNamee and Larry G. Garberding created PLUG on June 27th, 1997, and it is located in Latham, New York.
I gushed over the first two, and they deserved it. It’s not that PLUG isn’t a good stock; it is, but it’s simply not operating on the same scale as LIN and SHEL. In other words, PLUG is a grower and probably best suited for long-term investors. That said, PLUG showed sales of $161.9 million for 2021. In 2022, PLUG is estimated to finish the year with $350 million, an estimated 113% growth from last year. Analysts forecast 33.30% more growth to end Q4 2022 and 21.60% growth in the first quarter of 2023. For Q3, PLUG’s big silver lining was in the $188.63 million sales, representing 31.06% growth.
PLUG has a market cap of over $9 billion and a higher daily average volume (17.2 million) than its peers on this list combined. PLUG’s stock is down by 47.01% year-to-date, which could explain such modest and speculative financials. However, there is also an opportunity to be had here. Analysts’ 12-month price estimates give PLUG a median target price of 28.00, with a high of 78.00 and a low of 15.00. This is an enormous 87.17% increase over the last price. PLUG’s upside potential is obvious enough to justify its buy rating. Although it’s not as “big” as its peers, it comes down to whether it’s the right stock for you and at the right time. Look at all the factors. Do your due diligence. Keep an open mind but a cautious one.
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