Two Competent Hydrogen Shares to Acquire with a $200 Budget Instantly
Hydrogen power often gets praised as a top eco-friendly substitute for fossil fuels due to its production through renewable energy sources like wind or solar, which generate the electricity needed to split water into hydrogen and oxygen. This hydrogen fuel then powers engines, with water being the only waste product from combustion. However, despite its ideal characteristics, the hydrogen industry has not seen significant growth over the past decade, with hydrogen production often costing more than oil or natural gas extraction and existing electrical grids proving more cost-effective to expand. Higher inflation and interest rates further increased the expense of hydrogen projects, making them less appealing.
However, as hydrogen technology advancements and the broader economic climate improve (including interest rate reductions), the cost savings from utilizing hydrogen may offset the initial expenditures. This could result in a resurgence of numerous hydrogen-based industries. The hydrogen fuel cell market is projected to grow at a compound annual growth rate (CAGR) of 30% from 2024 to 2032, while the hydrogen vehicle market may expand at a CAGR of 45% from 2025 to 2037, according to industry analysts.
Although caution is advisable when considering these optimistic forecasts, two undervalued stocks from these sectors – Plug Power (PLUG 11.30%) and Nikola (NKLA 0.85%) – may witness substantial increases as favorable market conditions surface. Both stocks are known for their volatility but possess the potential to generate substantial returns from a modest $200 investment over the coming years.
1. Plug Power
Plug Power specializes in hydrogen fuel cells and charging services for warehouses and fulfillment centers, having provided over 69,000 fuel cell systems and 250 fueling stations to date. Its primary clients include Amazon and Walmart, and it is now the world's largest single purchaser of liquid hydrogen. Plug Power's revenue saw a 40% increase in 2022 and a 27% rise in 2023, primarily driven by two major acquisitions that expanded its cryogenic equipment division and partially compensated for the slower growth of its core hydrogen fuel cell business, which was negatively impacted by the market's reduced appetite for expensive new hydrogen projects due to prevailing headwinds. Plug Power's net losses also increased during both years as it integrated those acquisitions.
Analysts anticipate Plug Power's revenue to expand by 25% annually from 2023 to 2026, while it is also expected to reduce its net losses during this period. The United States Department of Energy (DOE) recently granted Plug Power a $1.66 billion loan to construct up to six new green hydrogen energy production facilities.
Plug Power's stock has an enterprise value of $2.67 billion, suggesting it is underpriced at 2.3 times its projected sales for the following year. Although it remains a speculative investment, Plug Power's revenue growth, insider purchases, and rising institutional interest indicate it could rally further as more companies upgrade their logistics networks with its hydrogen charging solutions.
2. Nikola
Nikola manufactures electric semi-trucks, having recently started delivering its first hydrogen fuel-cell electric trucks (FCEVs) this year. However, Nikola's debut in 2020 was accompanied by numerous challenges: it missed its initial delivery targets, its founder Trevor Milton was convicted of securities and wire fraud in 2022, and battery fires in 2023 necessitated a recall of all its BEVs. Nikola is also unprofitable and has significantly raised its share count over the past three years to secure additional funds, while it faces intense competition from Daimler Truck and Tesla in the nascent electric semi-truck market.
Although facing numerous challenges, Nikola has demonstrated promising signs. Its BEV sales are currently suspended due to battery issues, but it delivered 203 FCEVs in the first nine months of 2024. Nikola expects to deliver 300-350 FCEVs for the full year, and analysts predict its revenue will surpass $112 million. For 2025, they anticipate Nikola's revenue to more than triple to $328 million as it escalates its FCEV deliveries and relaunches its BEV offering. Nikola also plans to establish a network of 60 hydrogen charging stations across the U.S. in partnership with Voltera by 2026.
Nikola's stock now has an enterprise value of $338 million, making it extremely affordable at approximately $1 in sales for the following year. Its insiders have purchased 15 times as many shares as they have sold in the past 12 months, suggesting it may be an enticing long-shot investment in the burgeoning hydrogen vehicle market.
- Given the projected growth of the hydrogen fuel cell market and the strategic investments in companies like Plug Power, intelligent investors might consider allocating some of their funding towards this sector, understanding that investing in stock markets involves risks and returns are not guaranteed.
- Hydrogen-focused companies, such as Plug Power and Nikola, might attract the attention of finance-savvy investors who see potential in these undervalued stocks and are optimistic about the industry's future, given the positive changes in technology and the broader economic climate.
