April 07, 2022 • Paul Rodden • Season: 2022 • Episode: 105
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In episode 105, With the first quarter of the year over, let's take a look at some hydrogen stocks and see how they're performing all of this on today's hydrogen podcast.
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With the first quarter of the year over, let's take a look at some hydrogen stocks and see how they're performing all of this on today's hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
In an article from forbes.com, the Trefis team which is a contributor to Forbes writes, the hydrogen themes outperforming this year will the gains continue? The Forbes theme of hydrogen economy stocks, which includes the stocks of us listed companies that sell hydrogen fuel cells related renewable energy equipment, and supply hydrogen gas has gained almost 3% year to date, compared to the s&p 500, which remains down by about 4% Over the same period. While the broader markets and growth stocks in particular have been weighed down by tightening monetary policy, surging inflation and the Russian invasion of Ukraine. Hydrogen stocks are benefiting from a couple of trends. The ongoing military conflict is making countries more serious about energy independence, Brent crude prices briefly rose to levels over $125 per barrel in early March, although they have fallen back to levels of around 105 currently. There have also been increasing uncertainties about gas supplies, particularly in the EU, which imports over a third of its natural gas from Russia.
The present crisis is proven to be a wake up call of sorts for energy importing countries, which are now looking to double down on renewable energy and alternative energy sources as means of reducing dependence on imported hydrocarbons. Investors believe that hydrogen related stocks could be big beneficiaries of this shift, while renewables such as solar and wind could be used to generate electricity and power light vehicles. Hydrogen related technologies could be key for heavier applications, such as trucking, heating, and industrial applications, such as cement and steel manufacturing. Separately, hydrogen can be used as a means of storing excess renewable energy generated from sources such as solar and wind. To be sure this transition isn't going to happen overnight and is likely to be an ongoing process. Moreover, producing clean hydrogen is expensive, and governments will likely have to tweak policy and incentivize the sector. Now within their theme Bloom Energy a company that sells solid oxide fuel cells for electricity generation has been the best performer with its stock rising over 9% year to date in 2022. On the other side, Cummins and industrial company best known for its engines and power generation products has been the weakest performer with it's stock declining about 6% year to date.
And now in a complimentary article and nasdaq.com Kailas Salunkhe writes, these two stocks are betting big on hydrogen fuel. The author writes, electric vehicles are becoming mainstream, and as the world's focus on climate change and cutting carbon footprint intensifies, the present Russia, Ukraine conflict and its impact on hydrocarbon prices has pushed this trend further. Names such as Tesla and Neo have the talk of the town on the EV space, with other major players taking steps towards EVs as well. Concurrently, another trend has been towards the development of hydrogen fuel as an alternative and a push for hydrogen powered vehicles. Different companies across different geographies are working on the hydrogen economy, Toyota and Hyundai have developed fuel cell vehicles. Last month, Toyota announced a pilot project for the Morai car in India, Saudi Arabia has announced the development of a $5 billion hydrogen fuel facility as the country looks to become a leading supplier of hydrogen and Chevron is setting up hydrogen distribution centers in collaboration with a Japanese partner with that Japanese partner being Iwatani.
On the other hand, Elon Musk has called hydrogen fuel cells extremely silly and fuel cells equal fool cells that he said in the past. Between these two extremes. Let's look deeper into two major names being Plug Power and Fuel Cell Energy, which are focused on hydrogen fuel cells and see how they perform in the coming periods. Plug Power provides turnkey hydrogen fuel cell solutions for the green hydrogen ecosystem. It has deployed more than 50,000 systems for emobility and counts Amazon, BMW and others including Walmart. Among its customers, annual revenues are projected to jump from $502.3 million for 2021 to 1.4 billion for 2023. While profitability remains a concern, the company's net loss per share is expected to narrow To 22 cents per share in 2023 from 82 cents a share in 2021. Moreover, look at the company's recent tie ups can provide a glimpse of things to come. Korean electric carmaker Edison Motors has tied up with plug to bring an HFC powered electric city bus to the market. PLUG is also partnered with Atlas Copco Mafi-Trench company and Fives to develop hydrogen liquefaction plants. Hydrogen liquefaction makes the fuel easy to transport leading to lower costs and a larger distribution reach. PLUG is also the largest buyer of liquid hydrogen across the globe and aims to supply 500 tons per day of liquid green hydrogen by 2025. The company expects to double this figure by 2028. The market is betting big on alternative fuels as seen in the price per sales ratio of 31.5 for plug where the industry median is at 1.5.
The company is investing heavily in future growth, which is indicated but its capex per sales ratio of 38.3% which is over a 13x multiple of the industry median of 2.7%. Now Morgan Stanley's Steven Bird has reiterated a buy rating on the stock alongside a price target of $60. Overall, the street is bullish on plug based on 10 buys and three holds and a strong buy consensus rating and a price target of $40.77 implying a potential upside of 32.33%. The other name on the NASDAQ radar Fuel Cell Energy manufacturers proprietary fuel cell technology platforms and targets large scale power users. The company also offers sub megawatt solutions for smaller power users in Europe. annual revenues are estimated to increase to $160 million in 2023 From 69.6 million in 2021. And its most recent first quarter showing fuel cell witnessed 113.7% year over year jump in its top line to 31 point 8 million. At the end of January fuel cell had a backlog of 1.31 billion, which provides visibility into future revenues. Moreover, the company is also developing a unique carbon capture solution in joint development with Exxon Mobil Research and Engineering Company.
The solution is designed to capture carbon dioxide, nitrous oxide and sulfur oxide and particulates from an external source while concurrently yielding power and hydrogen. Notably, the company is focusing on driving commercial availability of its advanced technologies solutions, which include distributed hydrogen via electrolysis, long duration energy storage and carbon capture. Fuel cells price to sales ratio of 23.1 indicates investors will have to pay less in the stock for each dollar of sales generated by the company as compared to plug Additionally, the capex to sales ratio of 97.6% implies that fuel cell is heavily investing in the future growth as compared to plug. Okay, so two very interesting articles highlighting the year to date stock performance of a handful of hydrogen companies. Now before I dive too far into this, please note that I am not a stock expert. But even I know good numbers when I see them. And one thing I would like to do is go over the hydrogen economy stocks on the Trefis portfolio.
These stocks include SunPower, First Solar, Cummins, Bloom Energy and FuelCell Energy. And in this portfolio, it does show that at least this grouping of companies is significantly outperforming the s&p 500 Gaining 3% this year to the s&p 500 Return of minus four. Now one trend that I'm seeing a lot of right now are these hydrogen companies partnering with off taker companies, creating great symbiotic relationships and driving a hydrogen economy forward. As an example, Plug Power partnered with Airbus, and announced a feasibility study with Airbus of bringing green hydrogen to mass air travel. And since that announcement was made, Plug Power stock has jumped 21%. And going forward, I think a lot more of these deals will be reached and smaller hydrogen generating companies moving into and then pass the demonstration phase of their technology. So as more and more of these demonstration projects become valid and showcase real economic methods of generating hydrogen, I believe that the industry will start seeing even more rapid growth, especially as we see more companies like Suncor exiting wind and solar and focusing on hydrogen and renewable fuels.
Alright, that's it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to... Apple podcasts, Spotify, Google, that would be a tremendous help to the show. And as always, if you ever have any feedback, you're always welcome to email me directly at info@the hydrogenpodcast.com. And as always, take care Stay safe. I'll talk to you later.
Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more, I'd appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.