Our Top 3 Hydrogen Stock Picks for 2023

Stocks to buy

Hydrogen could be one of the most explosive opportunities of the new year. We already know Goldman Sachs believes the space could be a $12 trillion market by 2030. We also know that analysts at Bank of America say green hydrogen could be worth more than $11 trillion by 2050. And we know Morgan Stanley sees a potential $11 trillion opportunity. So I went hunting for the top hydrogen stock picks for 2023.

Even better, BP (NYSE:BP) and other major oil companies are investing in hydrogen.  In fact, according to Reuters, BP spent about a quarter of its $15.5 billion budget acquiring low-carbon businesses.  For example, in Australia, BP bought a hydrogen project. In short, the time to get in front of the hydrogen boom is now.

HDRO Defiance Next Gen H2 ETF $10.10
BE Bloom Energy $20.13
BLDP Ballard Power $5.52

Defiance Next Gen H2 ETF (HDRO)

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One of the best ways to diversify into hot sectors is with an exchange-traded fund (ETF), such as the Defiance Next Gen H2 ETF (NYSE:HDRO). Not only does this ETF offer a good deal of exposure to industry giants, but it does so at a much lower cost. For example, the HDRO ETF, which has an expense ratio of 0.30%, trades at around $10 a share. With this ETF, investors gain exposure to stocks such as Plug Power (NASDAQ:PLUG), Bloom Energy (NYSE:BE), Ballard Power (NASDAQ:BLDP), FuelCell Energy (NASDAQ:FCEL), and dozens more.

To be included in this ETF, a company must generate 50% of its revenue from hydrogen and/or a fuel cell project or be involved in developing fuel cells or hydrogen sources, according to Defiance ETFs.

Bloom Energy (BE)

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One of the most well-known hydrogen stocks is Bloom Energy (NYSE:BE), which specializes in solid-oxide fuel cells. So far, these fuel cells have been deployed in healthcare centers, data centers, retailers, auto manufacturers, and with prominent clientele such as Alphabet (NASDAQ:GOOG), Owens Corning (NYSE:OC), and Walmart(NYSE:WMT) to name a few. Better, its fuel cells are combustion-free, highly efficient, and produce zero carbon.

Analysts seem to like Bloom Energy for these reasons, among others. In fact, Jefferies’ Sam Burwell just initiated coverage with a buy rating and a $29 price target. Bank of America analyst Julien Dumoulin-Smith also has a buy rating, with a price target of $34. He argues that many of the company’s opportunities still aren’t priced into its current share price.

Ballard Power (BLDP)

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Ballard Power’s (NASDAQ:BLDP) zero-emission proton exchange membrane (PEM) delivers fuel cell power for various mobility modalities, including buses, trucks, trains, and marine vessels. According to the company, “Fuel cells improve the performance of electric buses by generating onboard power from hydrogen to recharge the batteries. Today, bus manufacturers offer fuel cell buses to transit agencies as a standard electric propulsion option.”

Ballard also announced a purchase order from Solaris Bus & Coach, a leading European bus manufacturer, for 25 hydrogen fuel cell engines. In Sept., Ballard signed a contract with Stadler to supply fuel cell engines to power the first hydrogen train in the U.S. Also, in early 2022, Ballard partnered with ABB (NYSE:ABB) to develop fuel cells that power ships. It even announced a test with Chart Industries (NYSE:GTLS) to power fuel cells with liquid hydrogen.

On the date of publication, Ian Cooper did not have (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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